Public pensions to cause tax rise?

PUBLISHED: 19:01 25 January 2010 | UPDATED: 11:38 25 May 2010

A SOARING public pension pot shortfall could lead to North Somerset taxpayers footing an extra £4million annual bill, a would-be MP has claimed.

A SOARING public pension pot shortfall could lead to North Somerset taxpayers footing an extra £4million annual bill, a would-be MP has claimed.

Slumping financial markets have seen the Avon Pension Fund deficit increase to more than £1billion, according to Weston's Liberal Democrat prospective parliamentary candidate Mike Bell.

He says the system that provides retirement income for North Somerset and Weston town councils, as well as Weston College workers, needs to be changed.

Mr Bell said: "Council taxpayers will be very concerned that tax bills will have to rise to make up the shortfall.

"The system has to be urgently reformed and there are various options including shifting to an average salary basis and raising employee contributions.

"The Government cannot go on burying heads in the sand and hoping that this issue will go away."

Mr Bell says the previous fund was valued at £446.7million in deficit in 2007.

People in North Somerset currently pay an employers rate contribution to pensions of 17.9 per cent, while employees put in between 5.5-7.5 per cent of their salary.

Changing pensions to reflect average salaries or increasing employee contributions are on the agenda for Mr Bell, who says the pensions of well-paid 'fat cats' should be dealt with first.

He added: "The Government has failed to grasp the nettle of local government pensions funding.

"A failure to set aside enough money and run the scheme responsibly means local residents are faced with cuts to vital services and council tax hikes, hitting pensioners especially hard."

However, Mr Bell's party's claim that the national public sector pension deficit is running at £60billion has been described as 'far removed from financial reality' by Unite the union.

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