The Local Government Pension Scheme could face a deficit of more than £60bn next year, freedom of information requests by the Liberal Democrats have revealed.
The FoI requests made to pension fund managers in charge of the pensions of county, unitary, district and borough councils in England and Wales show that 83 out of 87 were in deficit at their last official valuation in 2007.
Since then, one 10 funds have conducted their own valuations, with deficits up by more than 280 per cent on average.
Assuming this trend is replicated across all local Government schemes, the Lib Dems say next year’s official valuation stands to uncover a deficit of more than £60bn.
The party says under current rules, councils would be forced to plug the gap of any increase in the deficit, which could mean a combination of service cuts and council tax hikes.
It says the Government has “quietly” launched an informal consultation on removing the obligation on the funds to be 100 per cent funded.
ibDem Shadow Work and Pensions Secretary Steve Webb says: “The Government has failed to grasp the nettle of local government pension funding. A failure to set aside enough money and run the scheme responsibly means that millions of people could be faced with cuts to vital services and council tax increases, hitting pensioners especially hard. Thanks to ministers sticking their heads in the sand, many vulnerable people will suffer.”