I'm not sure of the logic of funding the pension fund deficit because returns are better than in the money market. The stock market has just reached an all time high so recent returns will have been good but that doesn't mean they will continue. The time to pro-actively cover deficits is when returns on the pension fund have been poor.
That said I would applaud this move as it is better that the issue of pension fund deficits at local authorities are dealt with sooner rather than later. They are only going to grow unless more money is set aside. It would be interesting to see projections but the concern is that the current effective freeze on Council Tax rates will not last and within the next decade we will start to see a sharp acceleration in rises driven primarily by the pension fund deficit. In Ealing the problem appears to be worse with the shortfall over half a billion. |