Austin Macauley 11 January 2016

Council pension scheme must be replaced, says think tank

Council pension scheme must be replaced, says think tank image

A think tank has warned the Local Government Pension Scheme will soon reach crisis point and should be replaced.

‘Excessive pension promises relative to contributions’ have left the scheme in a situation where it is ‘rapidly running out of cash’, according to a report by the Centre for Policy Studies.

It calls on the Government to switch it to a defined contribution (DC) scheme, ‘optionally including a cash balance arrangement (a form of defined benefit, DB) offered for an interim period’.

Michael Johnson, author of the report, said: ‘Putting the LGPS onto a sustainable footing requires political bravery, but doing nothing in respect of the ongoing DB pension accruals is not an option. Politicians should bear in mind that the inevitable cashflow crisis risks ceding management control to the media.’

One option to meet DB accruals, he said, would be scrap the current LGPS structure and pool the assets of the 89 council pension funds into a number of British Wealth Funds.

A spokesperson for the Local Government Association (LGA) said: ‘The Local Government Pension Scheme remains cash positive. In 2014/15 some £3.15bn was added to funds as a result of income once again exceeding expenditure across the scheme.

‘Nevertheless, the deficit position is challenging for employers especially given the financial challenges still facing councils. The LGA is working with funds and other stakeholders both directly and via the scheme advisory board on further reforms such as the pooling of assets in order to secure the long-term affordability of the scheme.’

Visit The MJ (£) to read their interview with the author of the report.

For your free daily news bulletin
Highways jobs

Head of Highways & Transport

City of York Council
£58,568 - £66,923 per annum
This is hugely exciting time to join the Council in this new role as the strategic lead for our Highways and Transport service. York, North Yorkshire
Recuriter: City of York Council

Youth & Community Based Commissioner

Essex County Council
£19308 - £19631 per annum
Youth & Community Based Commissioner Permanent, Part Time £19,308 to £19,631 per annum (FTE) Location
Recuriter: Essex County Council

Social Worker - Family Support & Protection Team

Essex County Council
Up to £207 per day + Umbrella
Family Operations delivers direct provision of services relating to vulnerable children, young people and complex families. These services will be del England, Essex, Harlow
Recuriter: Essex County Council

District Youth and Community Commissioner in Training

Essex County Council
£25313 - £28001 per annum
District Youth and Community Commissioner in Training Permanent, Full Time £25,313 - £28,001 Per Annum Location
Recuriter: Essex County Council

Social Worker - Early Intervention Team

Essex County Council
Up to £207 per day + Umbrella
*** This is a temporary position to start as soon as possible based at Colchester Hospital ***About the RoleWorking to support adults, and their famil England, Essex, Colchester
Recuriter: Essex County Council

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue