The excellence of the local government pension scheme is underlined by the banking crisis. Local government's pensioners are safe, despite remarkable falls in the value of typical pension fund investments. But it brings local government pensioners into stark contrast with the majority of private sector pensioners, who have defined contribution schemes. Most retiring this year will get 20% less pension than they would have received by retiring last year before the credit crunch. Grossly unfair. This means the debate about the affordability of all public sector schemes will not go away. To defend itself, local government must constantly remind the critics that, unlike many public sector schemes, the local government scheme is properly funded and invested. However, shortfalls do have to be met by council taxpayers, so it is vital that local authority pension funds repair the damage done by the banking crisis within acceptable timeframes as agreed with their consultant actuaries.
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