Town hall staff pay in only a quarter of the cost of their pensions
COUNCIL workers paid in only £1 for every £4 paid out in town hall pensions last year.
Nearly £6billion of the £8billion cost of the scheme came from taxpayers, an official report has found. Council workers stumped up just £1.8billion.
The research undermines claims that the public employees deserve special treatment because they pay for their own retirement benefits in a sustainable manner.
The figures released by the Communities Department showed that in the financial year that ended last March the Local Government Pensions Scheme put just £1.84billion toward maintaining staff pensions.
The state’s contribution was £5.92billion.
The generous final salary pensions – now largely denied to workers in private businesses – are enjoyed by council workers from bin men and canteen staff to social workers and planning officials. The cost of town hall pensions to the public is equivalent to £386 a year for every household paying the benchmark Band D council tax.
Details of council pension costs came as Communities Secretary Eric Pickles prepared to finalise a deal with unions to try to rein in pensions spending.
Unions agreed in the summer to a new scale that will pay benefits based on career average rather than final salaries. This will also gradually see the town hall pension age pushed up to 68 in line with the state pension age.
Brandon Lewis, a Tory local government minister, said: ‘Under the last administration, the cost of town hall pensions trebled. Town hall pensions were costing over £300 a year to every family and pensioner paying council tax, diverting funds from emptying bins, cleaning the streets
‘Simply cannot afford it’
and keeping council tax down. Hardpressed taxpayers simply could not afford to foot an ever-growing bill.
‘This is why this Government is taking action to reduce the massive and unsustainable cost of state sector pensions, and for the first year, the cost of town hall pensions has actually fallen.’
In 1997 the price to taxpayers of town hall pensions came to just over £1.5billion, less than a quarter of this year’s bill.
Only ten years ago the contribu- tions of employees covered almost half the full cost of their payouts.
The latest accounts show some of the reasons why the cost to taxpayers has been rising so steeply.
The scheme paid out £7.5billion to pensioners in the year that ended in March, 12 per cent up on the benefits paid in the previous year. But the contributions paid by town hall workers dropped from £1.966billion to £1.839billion, largely because there were fewer staff.
The number of workers on the scheme fell by 66,000 during the year, partly because of 27,500 redundancies, and the number of scheme members fell below 1.6million.
A report released last July revealed that nearly one million former council staff were drawing pensions.
The situation was described as ‘a ticking financial time bomb’ by the Taxpayers’ Alliance, which commissioned the study. The group’s Matthew Sinclair said at the time: ‘The local government pension scheme faces a bleak future. Unions and councils need to be realistic.’
Union leaders insisted the scheme was ‘viable and strong’.