By Jaimie Kaffash
16 September 2010
The liabilities of the scheme – which were £106m in 2009/10 – are anticipated to increase by the time of the abolition of the quango in 2012. This is because of the growing number of redundancies, leading to fewer contributions.
PF understands that the most likely outcome is that the fund will be absorbed into the civil service pension scheme, passing on its liabilities to central government. Raising the cost of local authorities’ fees to cover the deficit during the commission’s final year is expected to be politically too difficult.
Richard Hardy, negotiations officer at the Prospect union, said any pension liabilities would be ‘crystallised’ on the commission’s closure. He added that the issue ‘did not seem to have been thought through before the decision to abolish the commission’.
Hardy claimed that Local Government Secretary Eric Pickles, who expects to save about £50m a year from closing the spending watchdog, had failed to respond to requests to meet about the matter.
A spokeswoman for the Department for Communities and Local Government said the scheme’s future would be ‘considered as part of the broader plans to transfer the commission’s audit functions into the private sector’.
The fund is set up in a trust, separate from the commission and entirely dependent on funding from employer and employees. It is currently close to breaking even and judged to be performing well.
A letter from the chair of the scheme’s trustees, Sue Timbrell, to members last month said there were ‘several ways’ in which the benefits could be dealt with, ‘including retaining them in the Audit Commission Pension Scheme, by transfer to another pension scheme or merging with another scheme’.
Last week the PF website revealed that abolishing the Standards for England watchdog could cost more than two and a half times its £6m annual budget. Pension liabilities were a significant factor.
16 September 2010
The cost of abolishing the Audit Commission could spiral because of a potential rise in its pensions deficit, Public Finance has learnt.
The liabilities of the scheme – which were £106m in 2009/10 – are anticipated to increase by the time of the abolition of the quango in 2012. This is because of the growing number of redundancies, leading to fewer contributions.
PF understands that the most likely outcome is that the fund will be absorbed into the civil service pension scheme, passing on its liabilities to central government. Raising the cost of local authorities’ fees to cover the deficit during the commission’s final year is expected to be politically too difficult.
Richard Hardy, negotiations officer at the Prospect union, said any pension liabilities would be ‘crystallised’ on the commission’s closure. He added that the issue ‘did not seem to have been thought through before the decision to abolish the commission’.
Hardy claimed that Local Government Secretary Eric Pickles, who expects to save about £50m a year from closing the spending watchdog, had failed to respond to requests to meet about the matter.
A spokeswoman for the Department for Communities and Local Government said the scheme’s future would be ‘considered as part of the broader plans to transfer the commission’s audit functions into the private sector’.
The fund is set up in a trust, separate from the commission and entirely dependent on funding from employer and employees. It is currently close to breaking even and judged to be performing well.
A letter from the chair of the scheme’s trustees, Sue Timbrell, to members last month said there were ‘several ways’ in which the benefits could be dealt with, ‘including retaining them in the Audit Commission Pension Scheme, by transfer to another pension scheme or merging with another scheme’.
Last week the PF website revealed that abolishing the Standards for England watchdog could cost more than two and a half times its £6m annual budget. Pension liabilities were a significant factor.
