Hampshire councils face huge £1.7bn pensions shortfall (From Daily Echo)

Hampshire councils face huge £1.7bn pensions shortfall

4:10pm Thursday 4th March 2010 in

By Rachel Masker »

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PEOPLE across Hampshire could face higher council tax to plug the black hole in local government pensions which has soared to £1.7bn.

Annual accounts for Hampshire County Council, Southampton and Portsmouth city councils and each of the 11 district councils show the combined pensions deficit has increased by 67 per cent in just one year.

Campaigners have described the issue as a “huge ticking timebomb” and called for an overhaul of the system.

Hampshire County Council had the sixth largest pensions deficit of any local authority in the UK – £727m in 2008-9, according to the figures compiled by the Taxpayers’ Alliance The county also saw the second biggest increase in pensions deficit compared to the year before – £287m.

Last summer, the Daily Echo revealed how Hampshire pension Fund deficit rocketed after £687m was wiped off the value of investments, including £7m lost in the jailed Bernard Madoff swindle.

Southampton City Council had a pensions shortfall of £298m in 2008-9, up £133m. District council pensions deficits ranged from £22m to £61m.

More than 46,000 workers and 27,000 pensioners belong to Hampshire Pension Fund.

The last three-yearly formal valuation in 2007 showed a £891m gap between what the total fund is worth and what it will have to pay out in future. The next is due this month.

Since the scheme is part-funded by employer contributions – in effect money from taxpayers – homeowners could again be asked to plug the gap Southampton City Council finance chief Councillor Jeremy Moulton said: “It is fair to say that a larger deficit will mean a higher burden on council tax payers with no changes to the scheme as it stands. Whoever is in Government is going to have to look at public sector pension schemes very critically to see how they can be funded in future.”

John O’Connell, of the TaxPayers’ Alliance, described council pension deficits as “a huge ticking timebomb”.

He said: “Investment porfolios will have taken a beating in the credit crunch, but that is only part of the problem.

No matter how good the markets get, the inescapable fact is that local authorities are running unsustainable final salary schemes.

“Local taxpayers already pay a fortune for these pensions, and it would be grossly unfair for local authorities to try and plug this gap with yet more tax rises.”

In addition to the local authorities, civilian workers from the police and fire authorities, staff from Southampton Solent University and University of Portsmouth, plus dozens of smaller bodies and charities are included in Hampshire Pension Fund.

A council spokesman said Leader of Hampshire County Council, Councillor Ken Thornber, was the only person who could comment. He was unavailable.

Comments(23)

chapelsaint says...
4:32pm Thu 4 Mar 10

Can someone please explain to me why I should pay for this? No council staff are paying for the "black hole" in my company pension-I am having to suffer that my self. In my mind it is tantamount to robbery to extract any money this way and the Council should take a long inward look at itself and start cutting some of the ridiculous salaries of its higher level employees. It should also have a root and branch review of jobs at all levels and cut out those that are either non-productive or are not proven to be value for money. This may of course result in job losses but this has been the norm in the private sector for years.