Nearly £1 in every £4 raised in council tax is now being spent on ‘unjustifiably generous’ staff pensions, it has been revealed.
An analysis showed that councils contributed nearly £7billion to their employees’ pensions over the past year.
This compared to £1.1billion spent on libraries, culture, heritage and tourism, £2.2billion on emergency housing, and £20billion on adult social care, The Times reported.
It was estimated this means the average household is effectively paying more than £230 a year directly into council staff pensions.
Some 254 of Britain’s 317 councils replied to Freedom of Information (FoI) requests submitted by the newspaper.
These showed the local authorities paid £5billion into their staff pensions last year, which was an average of 23.5 per cent of their council tax revenue.
The data was then extrapolated across all councils, including those that did not respond, to show that more than £6.7billion was paid into pensions across all councils.
Hampshire County Council paid the single largest amount into its staff pension last year by contributing £281million – although this was to cover three years of contributions, the figures revealed.
Birmingham City Council, which declared effective bankruptcy last year, paid the second-largest amount at £141.7 million
It was estimated this means the average household is effectively paying more than £230 a year directly into council staff pensions
Birmingham City Council, which declared effective bankruptcy last year, paid the second-largest amount at £141.7 million.
The FoI requests showed that 14 councils paid more than half of the money they raised in council tax into their pensions.
The Local Government Pension Scheme is one of the largest pension schemes in the UK, with 6.1 million members across England and Wales.
It is a defined benefit pension scheme, which are sometimes called ‘final salary’ or ‘career average’ pension schemes and do not rely on investments or how much you’ve paid in.
Tom McPhail, a pensions expert at Lang Cat, the financial adviser, said: ‘In the context of today’s economy and the decline of private sector pensions, it is extremely difficult to justify the continued generosity of the local authority scheme.
‘If you rewind 30 years, it would have been relatively unexceptional and similar to what was being offered by FTSE 100 companies.
‘The difference is private sector employers became at first unwilling and then unable to meet the cost of such generous pensions.
‘Yet the public sector and, in this case, the local authority scheme, has just sailed blithely on regardless, relying on the captive funding of local authority taxpayers to subsidise their pensions.’
John O’Connell, chief executive of the TaxPayers’ Alliance campaign group, said: ‘While households across the country are faced with higher and higher tax bills, vast sums are being used to maintain nest eggs most people could only dream of.
‘These gold-plated pension schemes should be closed, with public sector benefits brought into line with those of the private sector.’
A spokesman for the Local Government Association, which represents councils, said: ‘Local government workers provide hundreds of essential services every day.
‘However, more than nine in ten councils are experiencing staff recruitment and retention difficulties.
‘The pension scheme can help encourage people to develop a career in local government.
‘With pay often lower in local government than comparable private sector roles, the scheme can mitigate that while helping public sector workers avoid needing welfare benefits in retirement.’
