‘Black hole’ in Norfolk councils’ pensions
06:30 11 July 2012
Concerns have been raised over a “black hole” in the pension schemes of two Norfolk councils after it emerged that for every worker paying into them there are two people drawing money out.
The statistics, released under freedom of information law, have led to fears that council tax bills could be hiked to plug the funding gap as an increasing amount of money is withdrawn from the schemes while the amount going in dwindles.
The figures were uncovered by the campaign group the Taxpayer’s Alliance (TPA) who requested similar statistics from every local authority in the country, leading them to estimate yesterday that across Great Britain there was a £54bn “black hole” in council pension schemes.
However, among the ten councils who had the worst ratio of employees paying into their schemes compared to individuals taking money out, were two local authorities in Norfolk.
These included Norwich City Council, where there are 731 employees paying into the local authority’s scheme but two and a half times as many people, 1,823 in total, drawing money out.
Meanwhile at Great Yarmouth Borough Council there are 388 workers paying into the authority’s scheme but more than double that number, 795 people, taking money out.
The Conservative MP for Great Yarmouth said: “I think these figures are not surprising unfortunately, but this is exactly why the government needs to look at reform. Other wise people that are working hard now and paying their fair share, it means when they come to retire there won’t be money form them to withdraw.
“Most people in local government will say they know there’s been an issue for some time, but no one has come up with a solution yet.”
The data also shows there are a further two Norfolk councils with top heavy ratios of those paying money in, compared to those withdrawing from schemes.
These include Breckland District Council, where 232 employees were paying in compared to 437 taking money out, and King’s Lynne and West Norfolk Borough Council where 524 workers were paying in and 647 individuals were taking money out.
Meanwhile Broadland District Council, North Norfolk District Council, South Norfolk District Council and Norfolk County Council all had more employees paying into their scheme than those withdrawing money.
TPA director Matthew Sinclair said: “The local government pension scheme faces a bleak future as more and more pensioners claim from a pension pot that fewer and fewer current staff are paying into.
“Unless changes are made so that the local government workers who will benefit from these pensions pay more of the cost, there is a real risk families struggling to afford much less generous pensions will be left with the bill.
“Unions and councils need to be realistic and ensure reforms are sufficient to deal with the pressures on the finances of town hall pensions. The government need to ensure that taxpayers aren’t left with a ticking financial time bomb.”
All of the local authorities in the county contribute to a single pension fund called the Norfolk Pension Fund which is run by Norfolk County Council. It also runs schemes for a range of other public and private sector bodies along with charities as well.
Head of the fund Nicola Mark said her administrators were aware of the fact that the pension fund was “maturing”.
Meanwhile she noted that recent austerity measures and actions taken to ‘outsource’ council services had led to redundancies and, consequently, fewer active members paying into the fund.
She said: “There is an element of truth that the impact of these things is reflected in the contribution the employer pays.”
However, she explained that the impact was mitigated by changes in the way the fund was managed; for example, through alterations to investments and the introduction of private sector contributors to the fund.
Furthermore she pointed out that the government was now consulting on new rules for the local government pension schemes to be brought before Parliament this Autumn that could increase employee contributions and cap the amount councils would have to pay into schemes.