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Local government pension gap balloons to £71.5bn
Originally posted by 5corpio
The funding gap faced by local government pension schemes in England has grown to £71.5bn, new research has revealed, despite a rally in equity markets boosting returns on investments.
The collective deficit of local government pension schemes rose by 73pc during the year ending March 31 2010, up from £41.3bn in 2009. The figure, collated from the latest set of annual council reports would grow to about £90bn if district councils were included.
Research by The Daily Telegraph found that Birmingham City Council had the largest gap between its assets and liabilities of the 151 county, metropolitan, unitary and London borough councils investigated. Its £1.65bn shortfall was followed by Leeds City Council at £1.47bn and Surrey County Council at £1.23bn.
The shortfall suffered across local government pension schemes was driven by changes to the way councils calculate their liabilities.
For instance, in its most recent annual report, Brent Council in London, said: “Investment markets have risen during 2009/10, increasing the value of assets. However, liabilities have risen far more rapidly as a result of higher anticipated inflation, increased longevity and the use of a lower discount rate, reflecting the impact of quantitative easing by the Bank of England.”
These changes have had a significant impact on council pension schemes. Birmingham council’s pension fund had assets worth £2.5bn in March 2010, 53.7pc of which were invested into equities. However, changes to liability assumptions saw liabilities grow to £4.16bn at the same time, up from £2.95bn a year earlier.......LINK to read more: Local government pension gap balloons to £71.5bn - Telegraph
The collective deficit of local government pension schemes rose by 73pc during the year ending March 31 2010, up from £41.3bn in 2009. The figure, collated from the latest set of annual council reports would grow to about £90bn if district councils were included.
Research by The Daily Telegraph found that Birmingham City Council had the largest gap between its assets and liabilities of the 151 county, metropolitan, unitary and London borough councils investigated. Its £1.65bn shortfall was followed by Leeds City Council at £1.47bn and Surrey County Council at £1.23bn.
The shortfall suffered across local government pension schemes was driven by changes to the way councils calculate their liabilities.
For instance, in its most recent annual report, Brent Council in London, said: “Investment markets have risen during 2009/10, increasing the value of assets. However, liabilities have risen far more rapidly as a result of higher anticipated inflation, increased longevity and the use of a lower discount rate, reflecting the impact of quantitative easing by the Bank of England.”
These changes have had a significant impact on council pension schemes. Birmingham council’s pension fund had assets worth £2.5bn in March 2010, 53.7pc of which were invested into equities. However, changes to liability assumptions saw liabilities grow to £4.16bn at the same time, up from £2.95bn a year earlier.......LINK to read more: Local government pension gap balloons to £71.5bn - Telegraph