Audit Scotland flags £53bn pension shortfall

22 Jun 06
The public sector in Scotland is facing an increasing pension fund shortfall, which now stands at more than £53bn, a study by Audit Scotland has found.

23 June 2006

The public sector in Scotland is facing an increasing pension fund shortfall, which now stands at more than £53bn, a study by Audit Scotland has found.

Its report this week said greater life expectancy was increasing liabilities as pensions will need to be paid for a longer time.

Auditor general Bob Black warned: 'The contributions from both employees and employers will almost certainly increase and there are likely to be demands on future public spending to meet these costs.'

However, the Convention of Scottish Local Authorities said the report should not be used to create panic over a so-called black hole in pension schemes. Cosla president Pat Watters said the report provided an actuarial valuation of a situation that would never play out in reality.

He said: 'It is totally unrealistic that everyone in these schemes will retire on the same day, live to the same age and die on the same day.'

The study showed that the local government pension scheme has a relatively low unfunded liability of £5.9bn. However, the NHS scheme for Scotland has unfunded liabilities of £15.5bn; the teachers' pension scheme, £14.2bn; the civil service scheme (which has 77,400 deferred or current pensioners and just 57,900 active members), £10bn.

For firefighters and police, the pension fund liability totals £7.8bn.

Black said the ways in which liabilities were calculated were not consistent across all schemes and this made it harder to report on the overall situation.

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