Local government pensions to cost £3.75bn

The cost of funding pensions for council workers will reach £3.75bn this year, according to a leaked report.

The increase will be needed to fill a £30bn ‘black hole’ in savings; an amount which has grown from £23.7bn in 2001. It will be made up largely by rises in council taxes.

The figures were revealed in a leaked document from local government officials to deputy prime minister John Prescott.

The government recently backed down from a plan to raise the minimum retirement age for local authorities from 60 to 65 after unions threatened a strike involving a million workers.

David Willetts, shadow work and pensions secretary, told the Times that the government had claimed it was starting to tackle the problem but “gave up as soon as it faced union opposition”.

Councils contribute up to 22.5% of employees wages into schemes.

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