Sunday, July 05, 2009

A pre-election fix for the local government pension scheme?

This weekend’s FT reports that the government is thinking about allowing the local government pension scheme to have more relaxed funding levels than private sector schemes - as local government has “constitutional permanence” ie it does not have the same risk of going bust. This resolves a thorny problem – it makes the next actuarial valuation (and coverage of the funding black hole) in spring 2010 less of an issue in the run-up to an election.

What is less clear is how this would leave entities outside local government – notably some housing associations and all FE colleges – whose support staff are members of the local government pension scheme. These entities do not have the same permanent. Perhaps they will still face increased pension costs in 2010 and into the foreseeable future with implications for both their finances and their services.

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