Pension schemes run by councils in Cambridgeshire have run up a deficit of more than £480 million – triggering fears that taxpayers will have to foot the bill.
The final salary schemes are too generous at a time when the population is ageing and the economy is floundering, according to the TaxPayers’ Alliance campaign group, which released the figures and wants the system to be reformed.
The biggest shortfall is at Cambridgeshire County Council, where the scheme has assets of £622 million, but liabilities of £930 million – so the gap stands at £308 million, equivalent to £501 per resident.
The deficit at Cambridge City Council is £58 million, or a further £460 per person, while at South Cambridgeshire District Council the £32 million black hole works out at an extra £216 per resident.
Matthew Sinclair, director of the TaxPayers’ Alliance, described the Local Government Pension Scheme (LGPS) as a “ticking time bomb”.
He said: “With an ageing population and a crisis in the public finances, generous final salary schemes like the LGPS are inflexible and too expensive, and need urgent reform.”
At the city council, for example, employer contributions are set at 18.6 per cent, while employee contributions range between 5.8 per cent and 7.5 per cent.
Head of accounting services Julia Minns said funds had been set aside to increase employer contributions by a further 0.75 per cent if needed.
The rest of the countywide deficit is made up of £58 million in Huntingdonshire, £13 million in East Cambridgeshire and £29 million in Fenland.
The county council administers the schemes on behalf of the other authorities and Cllr Steve Count, its cabinet member for resources, said new investments were planned to deal with the deficit.
He said: “These figures are just a snapshot of the current situation and reflect the current down trend in markets reducing the value of investments.
“Our plans to deal with the deficit reach decades into the future which is when the effects, if unchecked, would be felt.”
The Government has proposed changes including increasing employee contributions, raising the age of retirement, and basing pensions on average salaries.