Fears over £379m pension deficit

Central Beds Council
Central Beds Council

A financial timebomb is ticking due to a £379million net pension fund liability Central Beds Council currently holds.

The pension fund liability is the difference between what the council has in its pension fund and what it will eventually have to pay out.

The liability has risen by £72million in just one year and the council could face signficant problems in the future if this number continues to rise.

Central Beds Council insist they are not concerned about the £379million liability.

However, Independent Councillor Adam Zerny is worried about the number of staff who earn large salaries.

He said: “The council now employs 181 members of staff who earn more than £50,000 a year. This number is up 17 percent in one year.

“This will also have a significant effect on the pension fund liability as higher paid staff invariably require bigger pensions.

“It’s also worth noting the council spent £780,000 last year on staff redundancies, which while lower than the £816,000 they spent last year is still very high, especially when you see that last year, £156,000 of that £816,000 was on just one person.”

However, Councillor Kevin Collins, Deputy Executive Member for Corporate Resources at Central Bedfordshire Council, said: “There is no impact on employees, pensioners or individuals with deferred benefits in the Local Government Pension Scheme.

“The net pension liability of £379m is derived from an estimate and there is no direct link to funding or employers’ contribution rates; the net liability is also matched by the Pension Reserve.

“The increase in liabilities is typical of all final salary pension schemes and reflected unusually low bond yields at the valuation date (March 31, 2015). If bond yields were to increase in the future, then the estimated liability will reduce.

“There are statutory arrangements for funding any Local Government Pension Scheme (LGPS) deficit by increased employer contributions over the remaining working life of employees, which is determined by Bedfordshire LGPS who also decides the future contribution rates for employers based upon advice from an independent actuary.”