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COUNCIL tax may have to rise to plug public sector pensions

August 1, 2009 by  

Mind The GapDaily Mail, 1 August 2009

Bob Holloway, who runs the pension scheme for local government workers, has warned the gold-plated final salary schemes are no longer sustainable because people are ‘refusing to die’.

Local authorities are facing a £50 billion shortfall In their pension pots after recklessly investing taxpayers’ money In shares and hedge funds.

The respected Public Service Journal reported that officials are considering a number of ways to tackle the deficit, including raising council tax.

They are also looking at increasing employee contributions, raising the retirement age or cutting public services. Another proposal could see public servants’ pensions based on career-average earnings rather than final salaries.

Mr Holloway said reform was urgently need to tackle concerns about a ‘pensions apartheid’ between state and private sector workers. He said: ‘The local government pension scheme is under threat. Something has to happen -things may even happen before a General Election.’There will need to be something more major than a sticking plaster. Unfortunately, people are refusing to die.’

Accountants Price Waterhouse Coopers say council tax would need to rise by £2,000 per household to plug the gap.

A spokesman for the department for Communities and Local Government said; ‘No changes have been proposed. There is simply an informal consultation going on with scheme administrators.’

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