Ten years ago the Council's bill for pension payments was £32.176m. For the year to 31st March 2010 the bill was £76.879m. That is an increase of 139% in cash terms. The inflation rate (RPI) for the same period was just 31.1%.
What are the causes of this huge rise?
- Staff numbers have increased. In the period, staff numbers rose from 15,320 to 16,453 full time equivalents. That is over 7% up - even after advances on technology and ongoing efficiency savings.
- The burden on employers has increased. For the Local Government Pension Scheme, in the ten year period, the proportion of pensionable pay employers pay has increased from 13% to 20% (that is an increase in the employer contribution rate of 54%.) For teachers the equivalent rate has increased from 6.9% to 14.9% - an increase in the rate of 116%.
- Benefits have increased. There have been improvements in the benefits of the scheme which have led to higher contributions from employers.
A subsequent post will address what the Government needs to do in response to the initial report of Lord Hutton on public sector pensions, which was published yesterday.