Monday, 2 November 2009

Council taxpayers will fork out to make up £1.5m pension deficit

Improving? You're having a laugh!

POOR returns on investments and people living longer are likely to add £1.5m to the amount Derby City Council contributes to its pension scheme.

The fund, which is managed by Derbyshire County Council, covers the pensions for employees except teachers in all local authorities in the county, including Derby City Council.

About 36,500 people are paying into the final salary pension scheme and it is paying out to about 19,500 pensioners.

There are a further 16,500 people who used to pay in but have since left their employer and the pension is preserved until they retire.

Its value is monitored by an independent actuary every three years. The fund should have £2.6bn to make sure all its payments, both current and future, will be met.

At the 2007 valuation of the fund it was £514m short of that. Of this, £450m was for the county, city and district councils and these amounts will have increased due to the fall in the value of investments in the past year.

Council taxpayers in Derby city give £68 towards the pension scheme and, of that, £21 goes towards clearing the deficit.

For those paying Derbyshire County Council tax, £54 goes into the local government pension scheme – £14 of which goes towards covering the deficit.

The next independent review of the pension fund is due on March 31, 2010, with revised employers' contributions payable for the following years, starting in April 2011.

In light of the credit crunch and plummeting interest rates, the position could be significantly worse than it is now.

That is why the city council is already forecasting it may have to set aside a further £1.5m to put into the scheme.

How that money will be found will have to be decided during the budget process before it is set in March next year.

This is the same council that just wasted £15,00 on a playground for pensioners!

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