Council has £727million pension hole

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THE region’s biggest council has been ranked second worst in the country for its pensions pot deficit.

According to a study, Durham County Council has assets of more than £1.2billion, but liabilities of more than £1.9billion, leading to a £727million hole.

Research also placed Sunderland City Council in 17th place in a table of pensions deficits.

It said the city authority had assets of £797million and liabilities of more than £1.2billion, leaving a deficit of £436million.

The figures were compiled by the Taxpayers Alliance (TPA), which claims the numbers show the public sector has been reluctant to accept pension reforms, despite pressure from unions.

It says the Local Government Pension Scheme (LGPS) is more generous than most private pensions and places a burden on residents.

The TPA claimed that with an ageing population and a crisis in the public finances, local authority final salary schemes are inflexible and too expensive, with the figures showing that a £1 in every £5 spent on council tax went to employer contributions.

Don McLure, Durham County Council’s corporate director of resources, said its deficit represents the amount it would need to set aside now to meet the benefits for all employees in service up to March last year.

He said: “Although this has a substantial impact on the net worth of the council’s assets and liabilities, in practice the council would never need to meet all of these liabilities in one go.

“Over time, we can address the liabilities by increasing contributions based upon the forecasted working lives of all the council’s employees.

“The forecasted period over which this deficit will be addressed is currently 19 years which is in line with other pension funds.”

South Tyneside Council administers the Tyne and Wear Pension Fund, including Sunderland City Council, and said it will also address the deficit over time.

A spokesman said: “The deficit figures for the individual councils reflect the global economic position and the size of the organisations concerned.”

THE union for public sector workers has responded to Taxpayers Alliance pensions report.

Naomi Cooke, GMB national pensions officer, said “Knee-jerk reactions to big numbers are not the way to reform a sound, viable pension scheme.

“Saving arrangements for retirement need to be encouraged not condemned.

“Making rash recommendations for pension cuts, with no assessment of consequences as has happened across the private sector, is to the ultimate detriment of taxpayers who end up footing the entire bill to cover people’s retirement.

“Evidence based negotiations are currently under way as unions and employers work towards a reform package for the LGPS.”