William Eichler 18 December 2015

UK’s largest public sector pension scheme is a ‘national embarrassment’

One of the UK’s largest public sector pension schemes is a ‘national embarrassment’, according to report.

Published by the Centre for Policy Studies (CPS), the new research reveals that the Local Government Pension Scheme (LGPS) risks running out of cash because of excessive pension promises relative to contributions.

The introduction of Pension Boards, and ‘abysmally ineffective’ governance, has exasperated this under-funding problem.

The CPS also describes the LGPS’ cost reporting as an ‘expensive work of fiction’ and calls for a culture change.

Michael Johnson, author of The LGPS: Unsustainable, warns that ‘over the next decade the scheme faces a perfect storm’ due to a combination of the following:

•Past under-funding;
•The end of contracting out rebates (April 2016; costing some £700 million per year);
•Potentially sclerotic investment returns in a post-QE world;
•Employers opting out of the scheme;
•Destructive demographics (the membership is both living longer and ageing);
•Mis-aligned cost and income drivers;
•A crippling accrual rate (increased by 63% in 2014); and
•Ten year grandfathering from 2014, which effectively renders Lord Hutton’s (cost-saving) proposals impotent for a decade.

‘And while 2013’s £47 billion deficit is expected to increase at the next triennial valuation (March 2016),’ Michael Johnson added, ‘it is negative cashflow that is likely to be the LGPS’s undoing.’

SIGN UP
For your free daily news bulletin
Highways jobs

Health Care Assistant - A1 Home Care - Chelmsford

Essex County Council
£10 - £11 per hour
Essex County Council (ECC) are delighted to be supporting A1 Home Care to recruit Health Care Assistant for their home care service based in Chelmsfor England, Essex, Chelmsford
Recuriter: Essex County Council

Administration Officer

The Coal Authority
£19,137 to £21,264
To apply please click the Apply Now link below. Mansfield, Nottinghamshire
Recuriter: The Coal Authority

Programme Assistant

City of York Council
£11.37 per hour
We are WorkwithYork and we are working with our client to find a Programme Assistant working with the Homes for Ukraine project. York, North Yorkshire
Recuriter: City of York Council

IT Security Manager

City of Bradford MDC
£42,614 - £47,665 pa
This is an exciting opportunity for an enthusiastic IT Security Manager Bradford, West Yorkshire
Recuriter: City of Bradford MDC

Recovery Support Worker x 3

Wakefield Council
£12,963.50 - 14,113.00
We are seeking to appoint suitably skilled, motivated and caring recovery support workers Wakefield, West Yorkshire
Recuriter: Wakefield Council

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.