Chapter 6
Local authority pension funds6.0.1 This chapter gives information on the income and expenditure of the pension funds in the Local Government Pension Scheme, and the numbers of fund members in the scheme.
6.1 Pensions for local authority employees
6.1.1 The pension funds in the Local Government Pension Scheme provide pensions for most local authority employees. In England there are 81 pension funds in the Local Government Pension Scheme. The assets of the pension funds are for meeting the future pension liabilities of the funds, and are part of the financial corporations sector in the National Accounts, not part of the local government sector. Pensions paid out under the scheme are therefore part of the expenditure of the pension funds, not the local authorities that administer them. Employers' and employees' contributions, part of the income of the funds, are recorded as expenditure by local authorities in their revenue accounts, either directly or indirectly under employees' expenses.
6.1.2 Separate arrangements apply for the pensions of the police, fire fighters and teachers. The police and fire fighters' pensions are provided through unfunded schemes administered locally, and the cost of police and fire fighters' pensions are therefore included in local authority expenditure. Teachers' pensions are provided through a notionally funded scheme administered by the Department for Education and Skills (DfES). There is no fund of assets, and teachers' pensions are paid by the DfES. Employers' and employees' contributions are paid by local authorities to the DfES and recorded as expenditure in their revenue accounts.
6.2 The Local Government Pension Scheme in 2001-02
6.2.1 The following tables, charts and commentary provide information and statistics on the Local Government Pension Scheme from 1993-94 to 2001-02.
The market value of the funds at end March 2002 was £78.3bn, a decrease in the year of 0.4%. In the same period the FTSE All Share Index decreased by 5.7%. There were about 1.5 million employees in the scheme at end March 2002, an increase of 5.0% in the year. There were about 0.9 million pensioners (including dependants) at end March 2002, an increase of 2.4%, and about 0.6 million former employees entitled to deferred benefits, an increase of 10.7%. Expenditure on benefits in 2001-02 rose by 5.6% to £3,463m. Income from employees' contributions rose by 7.5% in 2001-02 to £1,139m, and income from employers' contributions rose by 15.1% to £2,617m in the same period. Income from investments fell by 5.1% in 2001-02 to £2,207m.
Table 6.2a: Pension funds 1993-94 to 2001-02
In 2001-02, 82% of the expenditure of local government pension funds in England was on lump sums, pensions and annuities for retired members and their dependants.
Chart 6.2b: Local government pension funds expenditure 2001-02
In 2001-02, 56% of the income of local government pension funds came from employers' and employees' contributions. Income from investments provided 33% of the total.
Chart 6.2c: Local government pension funds income 2001-02
Published 12 November 2003
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