A TICKING pensions timebomb is threatening the Forest council's budget as its leaders face a future of having to find ever more money to top up underperforming workers' pensions.

All local authorities are in the same boat, but Forest of Dean District Council is in the worst position of any district in Gloucestershire. Currently pension contributions are 29 per cent of its £8-9m wages bill – which means for every £100 paid to workers, another £29 has to be found to keep their pensions in line with the compulsory deal agreed with government. And with pensions continuing to perform badly, the bills to meet the deficit are set to keep rising.

Leader of the Council, Peter Amos, said: "The biggest challenge for the future is the amount of contributions we have to make to the pension scheme for officers. Currently 29 per cent of our wage bill consists of pension contributions; within three years it will rise to 40 per cent unless we have government intervention".

To meet a projected rise to 40 per cent the council will need to choose between cutting services, making efficiency cuts or raising taxes unless the government renegotiates the national pension deal with workers.

"Yes, it's a massive problem," said Cllr Brian Robinson, who speaks on finance for the council.

He explained the Forest's hands are tied because the pension scheme is managed on a county-wide basis by trustees and actuaries. On top of that, all authorities are liable to meet the shortfall in any underperforming pension schemes in line with terms agreed by government.

"Over the last six or seven years the scheme has always come out in deficit, therefore the funding has had to be increased. A third of the salary bill is now pension contributions. It's a big cost if it is continually going to go up and I'd be very surprised if it goes down.

"There are two issues. One, I think the scheme is very generous with very good pension benefits from the age of 60 (now increased). Second, most private sector companies have renegotiated their schemes to reflect the changing age of the population and the economy – government hasn't.

"The private sector looked over the edge of the cliff and said 'we don't like that' and did something. Government looked over the edge of the cliff, said 'we don't like that' and has done nothing.

"It's looking to be a bigger and bigger problem the longer that goes on. We'll need to find savings elsewhere and efficiencies. At some point though, it won't be sustainable unless the government does some­thing."

Cllr Robinson said one simple option would be to: "Change the scheme for all new recruits. It would have to be different because we just can't afford this one."