Fife Council denies council tax payments are finding their way into the pension funds of local authority staff.
Earlier this week claims emerged money from up to half of council tax bills were finding their way into the pension pots of employees at councils across Scotland.
However, Fife have insisted this is not the case in the region and dismissed the claims made in an Audit Scotland study, stating there is “no link” between council tax and pension costs.
Although admitting pension costs are becoming an ever-increasing cost to local authorities, Brian Livingstone, head of financial services with Fife Council, is adamant there is no way in which council tax contributions are ending up in staff pension funds.
He said, “There is no doubt that pension contributions are a significant and rising cost for local authorities. This is in large part due to recent poor stock market performance, particularly in 2007-08 and 2008-09, coupled with the fact that people are living longer and this puts a greater strain on pension funds.
“It is grossly misleading to suggest that half the cash raised by council tax is ‘soaked up by gold-plated pensions for local authority pen-pushers’. Firstly, there is no link between council tax and pension costs, no more so than there is a link between council tax and say, the costs of the education service, which in Fife is more than twice what we raise in council tax.
“Council tax is a small (20%) proportion of total local authority income, the vast bulk of which comes direct from the Scottish Government in the form of grants. Secondly, the majority of pension costs are paid out to low-paid workers with average annual pensions of around £4000.”
The Audit Scotland report claims the pension shortfall as of last March stood at £66 billion and have stated their intention to launch an investigation into the matter later this year.
The body also warned arrangements for the NHS and police and fire services could be even worse.
Mr Livingstone added, “Local authority pension schemes are less of a problem than the unfunded schemes in the NHS, police and fire, etc. The bulk of the public sector pensions’ shortfall relates to these unfunded schemes.
“However, that doesn’t disguise the fact that local authorities should be managing and controlling their pension funds to minimise as far as possible the costs falling on councils and this is something we are acutely aware of in Fife.
“For 2009-10 the average employee contribution rate into the Fife Pension Fund was 6.1% and the average employer’s contribution rate was 17.6%. Employee contribution rates range from 5.5% to 12%, based on pensionable earnings.”
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