The ticking time-bomb that is public sector pensions

The Taxpayers Alliance (TPA) has today issued a damning report on public sector pension schemes in the UK with local government pension funding estimated to have a shortfall of around £53 billion. The figure for the 2008/09 tax year sees more than 15 councils with a deficit of over £500 million each which will be funded by UK taxpayers in due course.

The figure of £53 billion is an increase of £9 billion on the previous tax year after investments fell by £21 billion during the 12 month period, with additional contributions making up some of the shortfall. Taxpayers do not seem to realise that these gold-plated local council pension schemes, which are final salary based, continue to grow in size and continue to place more pressure on the tax liabilities of UK consumers and UK businesses.

Many governments have attempted to address the problem of public sector pension funds, and the growing deficit, but the situation is now at crisis point and needs to be addressed immediately. When you consider the requirement to increase UK taxes to cover government spending during the recent recession as well as the £53 billion pension fund deficit the UK tax regime is set to become much harsher!