§ Mr. David Porter
To ask the Secretary of State for the Environment on what basis it is now proposed that the cost of pensions increases should be transferred to the local government superannuation funds in England and Wales; and if he will make a statement.
§ Mr. Heathcoat-Amory
My right hon. Friend the then Minister for Local Government announced on 24 April 1989 that he proposed, subject to consultation with the relevant local government interests, to transfer the cost of pensions increases to the local government superannuation funds as from 1 April 1990 on the basis that the 783W present requirement that they should be in a position to meet all foreseeable future liabilities in respect of basic pensions only should be replaced by a provision that they should be able at any point in time to meet three quarters of a combined liability for basic pensions and pensions increases. He estimated that on that basis most local authorities in England and Wales would be able to reduce their overall annual expenditure on superannuation by about £6 per head of adult population.
Local government interests have made representations to the effect that it may be appropriate for the funds to be required to meet a rather higher proportion of their new combined liability at any one time. I have come to the conclusion, however, that a 75 per cent, rate of funding would be entirely prudential, as explained by my right hon. Friend, and would minimise the number of authorities who were required to increase expenditure on superannuation in consequence of the transfer of responsibility for payment of pensions increases to the funds.
I shall, however, keep the level of liabilities that funds are required to be in a position to meet under review, with a view to increasing it in future years as such increases become appropriate.