Barnet’s pension fund faces “deficit spiral”
Barnet Council’s pension fund could spiral into massive deficit with taxpayers forced to foot the bill, warn union leaders.
Council plans for large-scale privatization and a nationwide push for council workers to contribute more to their pensions could lead to a crisis for Barnet’s pension fund, according to a report commissioned by UNISON.
The study predicts mass opt-outs from the council’s pension scheme, leaving the council paying out more than is coming in from leftover participants.
First Actuarial, which wrote the report, says Barnet’s pension fund currently stands at �22.9million. But the consultancy firm predicts a fall in funds of up to �55.9million by 2012, leaving the fund �25million in the red.
Finance boss Councillor Daniel Thomas said the report seemed tossed together in a hurry and made misleading assumptions.
“Our actuaries have been clear that on any realistic assumptions the council’s pension fund will remain cash positive at current employer’s contributions through the foreseeable future,” he said.
Talks between unionists and the council to stop a strike on Tuesday (September 13) failed this week thanks to the changes to pensions, according to a council source. New employees – taken on by private companies – will not be offered the same pension deal as existing employees.
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Current council workers transferred to the private sector will have their pension plan safeguarded for a year. Any changes to the scheme will have to be negotiated with the unions.
UNISON Branch secretary John Burgess said: “The people who are taking over council contracts have been told you have got to deliver massive savings. That’s one of the ways which would reduce their ability to do that if they don’t have to pay the contributions then that’s their saving right there which they can take back to the council.
“The council has got itself into a double bind. It’s a risk to workers and residents.”
Councillor Susette Palmer, who sits on the Pension Fund Committee, said: “It’s important for it to be looked at very carefully but part of the problem is it’s all tied up with the One Barnet plan which I have the greatest doubts about. I’m not happy about contracting out nearly everything because no matter what they say, you lose control.”