The value of the Local Government Pension Scheme could fall as a result of last week’s decision to exit the European Union, councils leaders have warned.

The Welsh Local Government Association (WLGA) said a prolonged collapse of the stock market – the FTSE 100 index was down 0.4% this morning – could cause ‘huge’ problems for the pension scheme.

Cllr Bob Wellington, leader of the WLGA, said: ‘As a responsible employer local government also has a duty to highlight potential difficulties for our workforce. For example, any prolonged collapse of the stock market will signal huge problems for the £13bn Local Government Pension Scheme in Wales which is fully funded and based on market investment.

‘With an actuarial valuation due this year it is vital that confidence is returned as soon as possible, otherwise millions of pounds will be lost for the schemes pensioners.’

The WLGA also warned the outcome of the referendum will have a ‘seismic change’ on public policy in the UK, and is backing calls for a revision of the Barnett formula.

‘The WLGA wholeheartedly supports the call of the first minister for a revision of the Barnett formula and a new financial settlement for Wales,’ said cllr Wellington.

‘We also fundamentally oppose any emergency budget that sets out further cuts and renewed austerity with councils once again bearing the strain.’