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Could council tax rises be on the way to cover pension fund deficits?

We have covered on numerous occasions the problem of local authority pension schemes, which are final salary based and very expensive to run, and the ticking timebomb which is getting ever louder. This subject ties in with an announcement from Bob Holloway, the administrator of public sector worker pension schemes, who has confirmed that these particular schemes are becoming more and more expensive to run and ultimately more and more expensive for the UK taxpayer.

It looks as though the current pension fund deficit on these particular schemes is running at around £50 billion which will have to be recouped in the years to come. A mixture of lower investment returns, lower interest and investment mistakes have contributed to the situation which is now moving towards a critical stage. When you consider that your council tax has been rising for some time, the rises of the past may be dwarfed by the rises in the future which may bring about some rather bizarre decisions.

There is speculation that even if council taxes rise to cover the pension fund shortfall we could actually see a reduction in investment in the public services which will ultimately mean taxpayers paying more for a lower level of service. How bizarre is that?

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