Council exec issues warning as a third of council tax goes on staff pensions

In spite of reforms, by 2019 council taxpayers will see 34 pence of every pound they pay spent on the pensions. 

The warning came from Chris West, executive director of resources at Coventry City Council. 

He said bids to lessen the burden of council pension schemes had failed, leaving a system that is “wholly unaffordable and unsustainable”. 

“And almost no-one feels able to say so,” he added. 

The fact people are living longer, combined with Government- imposed cuts have been blamed. It means that by 2019/2020, the share of pension contributions as a percentage of a council’s net budget may at least double. 

Mr West said: “In any ‘normal’ financial climate, pension payments would be challenging. In the current context the issue is unsustainable.

“As local authority budgets reduce and staff numbers fall, the overhead of pension costs falls on a smaller base and a smaller number of employees. 

“This is unmanageable.”

He said solutions included council staff contributing more, or adjusting pension terms so that staff put by 1/60th of their average salary for every year served, rather than the current 1/49th. 

A report in December by think-tank the Centre for Policy Studies stated that the Local Government Pension Scheme had become a “staggeringly inefficient, selfserving empire”. 

The Government has already stated that the affordability of such pensions is in question. 

This week it will publish public sector accounts, and they are likely to reveal the true scale of pension problems at the NHS, councils and elsewhere. 

Under the current reformed system, local authority workers’ pensions are based on average salary over a career. 

But defined benefit schemes such as these have been ditched elsewhere in the private sector. 

Experts believe further reforms will be required to avert a future crisis within local authroity funding.