At least £1 in £4 of council tax is going straight into funding the retirement of “town hall pen pushers”, figures have revealed.
The figures show 254 authorities paid £5billion into their staff pensions last year, which was an average of 23.5% of their council tax revenue.
Elliot Keck, head of campaigns at Taxpayers’ Alliance, said: “Of every £4 now raised in council tax, £1 is spent on local government pensions.
“That’s money that won’t go towards fixing potholes, maintaining regular bin collections or keeping open the local library.
“Probably most significantly, it’s money that won’t go towards adult social care, one of the biggest and growing burdens on town hall finances.
“So when your council tax goes up, as it almost certainly will, just remember – £1 in £4 of those pounds is going straight into funding the retirement of town hall pen pushers. And under this Labour Government, expect this situation to only get worse.”
Local authorities will be able to raise core council tax by 3% and adult social care precept by 2% in 2025-26 without need for a local referendum.
The local authority that paid the single largest amount into its staff pension last year was Hampshire County Council. It contributed £281million, the equivalent of £4,658 for every member of staff — although this was to cover three years of contributions.
Birmingham City Council, which declared effective bankruptcy last year, paid the second-largest amount at £141.7million.
The figures, obtained through Freedom of Information requests, mean the average household is effectively paying more than £230 a year directly into council staff’s pensions.
The data, first reported by The Times, showed that 14 councils paid more than half of the money they raised in council tax into their pensions.
Tom McPhail, a pensions expert at financial adviser Lang Cat, said: “In the context of today’s economy and the decline of private sector pensions, it is extremely difficult to justify the continued generosity of the local authority scheme.
“If you rewind 30 years, it would have been relatively unexceptional and similar to what was being offered by FTSE 100 companies.
“The difference is private sector employers became at first unwilling and then unable to meet the cost of such generous pensions. Yet the public sector and, in this case, the local authority scheme has just sailed blithely on regardless, relying on the captive funding of local authority taxpayers to subsidise their pensions.”
The Local Government Association, which represents councils, said: “Local government workers provide hundreds of essential services every day. However, more than nine in 10 councils are experiencing staff recruitment and retention difficulties.
“The pension scheme can help encourage people to develop a career in local government. With pay often lower in local government than comparable private sector roles, the scheme can mitigate that while helping public sector workers avoid needing welfare benefits in retirement.
The spokesman added that the scheme was more “robust” than most other public sector pensions and that employer-contribution rates are generally lower.
