Cash shortfall in council pensions put at £53bn

Huge deficits in local government pension schemes in Yorkshire have helped push up the shortfall nationally to more than £53bn, a report claims today.

The TaxPayers' Alliance (TPA) said 15 councils had pension scheme deficits which were more than 500m, up from 10 councils during the previous financial year.

It warned that the cost of running the schemes was placing an "unsustainable burden" on council budgets.

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The research found that council pension schemes faced a deficit of 53bn in 2008-2009, 27 per cent more than during the previous financial year.

It comes after a Yorkshire Post investigation last year revealed a pension fund black hole of more than 4.5bn at the region's local authorities. Experts warned the size of the deficit could lead to a rise in council tax or general taxation, or a cut in services. Among the largest black holes are 715m at Leeds City Council, 496m at Sheffield City Council and 388m at Hull City Council

Across Britain, councils' own actuarial estimates showed that the value of assets held in the schemes fell by more than 21bn, or 20 per cent, during the year, the TPA said.

Birmingham City Council, the country's largest local authority, which has recently warned it may have to cut up to 2,000 jobs, had the biggest deficit at 1.05bn, the alliance said.

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Councils offer final salary pension schemes, the majority of which have been closed to new members in the private sector after rising longevity and the volatility of investments made them increasingly expensive.

TPA policy analyst John O'Connell said: "These deficits are a huge ticking time-bomb."