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Scottish councils' pension contributions to increase as liabilities double

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UK - Employer contributions to Scottish local authority pension schemes could increase after the Accounts Commission found the pensions deficit more than doubled in the last financial year.

The gap between the assets and liabilities of councils' pension funds widened from £3.8bn (€4.4bn) in 2009 to £9bn at the end of March 2010.

The 53% increase in the forecast liabilities outstripped by far a £4.5bn increase in the value of assets across Scottish public sector pension funds in the same period.

A spokeswoman for the public spending watchdog said market conditions accounted for the figures and that a recommendation for an increase in employers' contributions was "a possibility".

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The prospect is unlikely to go down well with local authority schemes. Councils' contributions to the local government pension scheme increased by 24% from £542m to £670m between 2005-06 and 2009-10.

A £60m increase in employers' contribution in 2009-10 was the result of a 2008 triennial valuation.

Ian Hickman, a pensions manager at the Scottish Borders local authority pension fund, said the scheme wanted to see consistency on employers' contributions after recent volatility.

"These issues are being addressed through arrangements with the fund's actuaries to spread funding over a reasonable period of time," he told IPE. "We've been looking at contribution sharing arrangements on an ongoing basis to the past year or so."

In a submission to the government-commissioned Hutton Commission on public sector pension reform, the £10.5bn (€12.1bn) Strathclyde local authority pension scheme - one of the country's largest - urged the retention of a 2:1 employer-to-employee contributions ratio.

Pensions head Richard McIndoe said in the year-end submission: "This still seems an appropriate objective."

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