§ Mr. WebbTo ask the Chancellor of the Exchequer what estimate he has made of the cost to(a) local authorities and (b) the national health service of making good the shortfall in employer pension funds arising from his Budget measures. [7772]
§ Mr. Darling[holding answer 10 July 1997]: There are around a hundred local authority pension funds. The position will vary depending on factors such as financial circumstances and the make up of investment portfolios. For example, many funds have surpluses which can be used to help cushion the effect. Pension schemes should also benefit from improved company performance as a result of quality long term investment being encouraged. Although the loss of tax credits will have some impact on the income of local authority pension funds, the extent to which these changes feed through to authorities' budgets will depend on the overall judgements made by the funds' actuaries as they undertake revaluations due from next year. Their conclusions will not be reflected in contribution rates before 1999–00 at the earliest. The Budget changes will not adversely affect the NHS scheme on present assumptions, since it is based on a notional fund assumed to be invested entirely in Gilts.