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Fears over £1.5bn pensions shortfall
Taxpayers across Lancashire could have to shell out £1.5bn to plug a black hole in government pension coffers, the Lancashire Evening Post can reveal.
Finance bosses made the admission after blaming an "extreme volatility in investment markets" for a mushrooming debt tied to the nest eggs of more than 53,000 public sector workers across the county.
But staff ranging from police officers to lollipop ladies have been assured pensions are safe while the Government guarantees the scheme.
The Evening Post has learned:
The deficit in the Lancashire County Pension Fund is AT LEAST 1,499m and has more than doubled inside a year from 710m.
This is more than 3,029.50 per council tax property in Lancashire if the shortfall was paid off tomorrow or 151.47 per year over the next two decades, excluding interest.
The scheme's assets currently cover just 65% of its liabilities, according to latest estimates. Meanwhile, the value of the fund has plummeted from 3.65bn to around 3bn since March.
Finance chiefs are hoping to climb out of the red over the next 20 years, but admit the fund has not been 100%-funded since 2000. Around 60% of the fund is invested in stocks and stares including 26.5m in Shell, 25.2m in Vodafone and 23.4m in BP.
In 2007/08, more than 177m was placed in the fund with 118.5m coming from employers, including 51.2m from the county council.
Union bosses and a Lancashire MP are now calling for a full investigation.
But the council's senior finance officer Adrian Cutts is confident the fund will recover and has reassured staff their nest-eggs are safe.
Mr Cutts said: "If it's not fully funded, the employer and the council taxpayer funds the difference and I would urge the Government to keep open all options to keep the scheme in service.
"I am not suggesting any changes to the pension committee at the moment as things are changing by the day. I'm confident of improvement but it depends on a raft of variables including inflation levels and that's coming down.
"There is plenty of time for stock markets to recover to pay for future pensions, which in some cases are not due to be paid for 40 years."
But Ribble Valley MP Nigel Evans said: "It would seem there's been bad investments made for a long time. They can't hide behind the smokescreen of the recession. There needs to be more transparency and an independent investigation into their handling of the funds."
Les Parker, branch secretary for Unite at the county council, said: "If the deficit is running at 1.5bn, it begs the question what the heck has been going on as the investments are already limited by government.
"I think there should be a full and open examination of the deficit."
Mark Wallace, of the Taxpayers' Alliance, said: "It's terrifying that ordinary taxpayers have this huge IOU hanging over them when most ordinary people cannot afford pensions for themselves."
But South Ribble MP David Borrow is confident the scheme can recover. He said: "The job of the pension fund trustees is to plan long-term to make sure the scheme is in balance. I would have thought taken over the long-term, values of shares will go back up."
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Weather for Preston
Wednesday 08 February 2012
Today
Sunny spells
Temperature: -3 C to 3 C
Wind Speed: 18 mph
Wind direction: South east
Tomorrow
Light sleet
Temperature: 3 C to 3 C
Wind Speed: 10 mph
Wind direction: South east
