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£54bn deficit for council pension schemes

Council pension schemes have a combined deficit of £54bn despite £1 in every £5 of council tax being spent on employer contributions, according to the TaxPayers’ Alliance.

A new report from the right-leaning thinktank says the £54bn deficit in 2010/11 was down by 41 per cent from £91bn in 2009/10 but is up on the £51bn deficit in 2008/09.

The report says Birmingham City Council had the biggest deficit at £1.3bn while 14 authorities had deficits over £500m and 165 had deficits over £100m. London’s 32 borough councils, the City of London and Greater London Authority account for one-sixth of the total deficit at £9bn.

TPA director Matthew Sinclair says: “This is a ticking timebomb being left for future generations of tax- payers to deal with.

Councils’ pension liabilities continue to far outweigh their assets and the situation remains worse than two years ago.”

Local government minister Bob Neil says the report reinforces the need for reform. He says: “The cost of town hall pensions has trebled since 1997 and are costing over £300 a year to every family and pensioner paying council tax.

“Hard-pressed taxpayers simply cannot afford to foot an ever-growing bill. This is why this Government is taking action to reduce the massive and unsustainable cost of state sector pensions.”

Pension Transfer Solutions managing director Carl Melvin says: “This illustrates that these pensions are totally unaffordable and taxpayers are left to fill the hole.”

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