UK households are paying £250 a year in council tax to fund public sector pensions, according to the government’s pensions adviser.
Douglas Anderson said the growing cost of public sector retirement schemes was one reason why council tax bills have risen by 80% since 1997. He said a quarter of all council tax costs went on state pensions.
Anderson examined the spending of 16 councils and estimated that £5.2bn a year goes on public sector retirement schemes, out of a total spend of £20bn a year.
“We calculate that some 26% of council tax receipts go towards public sector pensions. There is every possibility this figure will rise over the next five years,” he said.
The government has been using council tax money, rather than central government funds, to pay the pensions of teachers, firefighters and the police, according to Anderson.
But the chairman of the Local Government Association said the estimates were incorrect.
Sir Sandy Bruce-Lockhart said: “The figures are highly misleading. In my own authority, Kent, only 15% of spending goes on the wage bill and only 20% of that covers pensions.”
