New £20m police pension black hole – and taxpayer has to fill it

AN ADDITIONAL £20 million of taxpayers' money will be used to bail out police pensions in Scotland, the Scottish Government announced yesterday.

Justice secretary Kenny MacAskill said the money would be used to meet a projected shortfall following a change in the rules that allows officers to take a greater lump sum on retirement. It follows £55m that has already been paid out by the Scottish Government for the extra costs of police and firefighter pensions over the past two years.

The new injection follows a Judicial Review decision in England and Wales. It will allow police officers to take a bigger lump sum on retirement, in return for smaller annual pension payments.

The fresh outlay of government cash represents only the latest controversy over public-sector pensions in Scotland.

There are considerable gaps in all the main public-sector pension funds, between what is being paid in by the employees and the liabilities the fund has to pay the pensions of current and future pension holders.

The scale of this "black hole" will become clear over the summer when the official, audited accounts of Scotland's local authorities are published, showing how great those liabilities are.

But even without these figures, there has been increasing private-sector disquiet over the generous pension arrangements that enjoyed by the public sector and are paid for, in large part, by private-sector taxpayers.

Derek Brownlee, for the Conservatives, warned that the whole public-sector pensions issue had to be dealt with before it got out of hand, particularly because of the widening gap between public-sector and private-sector provision.

He said: "We have got to get to a sustainable position that taxpayers, public-sector workers and everyone else thinks is fair. It is in no-one's interests to have an unsustainable position."

Mr MacAskill said he was keen to make sure officers did not lose out, and he wanted to be sure the money was available.

But he also attacked the UK government for failing to provide the money, claiming the Scottish Government had been left to pick up a bill that should have been met by the Treasury.

The justice secretary said: "Unfortunately, the UK government is not prepared to meet the costs, as they did south of the Border.

We have therefore agreed to provide the £20 million to meet these additional pension lump sum costs."

But Richard Baker, for Labour, said Mr MacAskill was wrong to blame Westminster. He said policing was devolved to Scotland and was covered in the block grant paid to the Scottish Government by Westminster.

He said: "I'm glad the SNP government listened to Labour's calls for them to provide retiring police officers with the cash to which they are entitled. It is very disappointing, however, that Kenny MacAskill tried to make a cheap swipe at Labour by wrongly suggesting he was picking up a tab for which the UK government was responsible."

Mr Baker said the Home Office was not able to "run to the Treasury" and demand more money for increased pension costs, so the Scottish Government should abide by the same rules.

Fund tumbles

SCOTLAND's largest pension fund has seen the value of its assets plummet by nearly £2 billion in the past year.

Strathclyde Pension Fund's deficit has increased five-fold in the space of just 12 months to about £2.6bn. Its overall assets have fallen from £9.3bn in April 2008 to £7.48bn a year on.

A spokesman for the fund, which has around 180,000 members, said: "The fall in the value is more attributable to market movements, rather than any company failure."