Publication - Statistics

Scottish Local Government Financial Statistics 2012-13

Published: 25 Feb 2014
ISBN:
9781784122706

Scottish Local Government Financial Statistics is an annual publication that provides a comprehensive overview of Scottish Local Authority financial activity. The publication covers Local Authority income, revenue and capital expenditure, outstanding debt, local taxation and Local Authority pensions.

Scottish Local Government Financial Statistics 2012-13
4. Local Government Pensions

4. Local Government Pensions

4.1 Local Government Pensions

Local Government Pension Funds are operated as separate funds to other accounts. In accordance with regulation 4 of the Local Government Pension Scheme (Benefits, Membership and Contributions) (Scotland) Regulations 2008, and regulation 35 of the Local Government Pension Scheme (Administration) (Scotland) Regulations 2008, employer and employee contributions are paid into the fund, along with income from investments, and pensions and lump sum benefits are paid out of the fund. The income and expenditure from these funds are therefore separate from the income and expenditure of the Authorities that administer the funds.

Table 4.1 - Local Government Pension Funds Expenditure 2008-09 - 2012-13

£ thousands
2008-09 2009-10 2010-11 2011-12 2012-13
Total Benefits including Payments under Pensions (Increase) Acts: 737,328 841,026 969,723 1,021,142 1,025,525
Pensions 429,290 544,814 574,929 651,085 601,299
Lump Sums 174,095 230,477 330,251 300,705 187,747
Other Benefits 2,302 2,700 3,006 2,883 2,838
Payments under Pensions (Increase) Acts 131,641 63,035 61,537 66,469 233,641
Transfer Values 41,942 69,848 46,244 33,839 41,701
Other 67,522 61,854 64,609 69,225 72,343
TOTAL EXPENDITURE1 846,792 972,728 1,080,576 1,124,206 1,139,569

Source: Local Financial Returns - LFR 24

1. Payments under the Pensions (Increase) Act 1971 relate to costs associated with uprating of pensions. In some cases local authorities were unable to separately identify this cost and included it within pensions, lump sums & other benefits.

2. Transfer Values are due to scheme members transferring to other pension schemes (for example where a scheme member has moved to a different employer).

3. "Other Benefits" includes, Fund Administration and Management Costs (the largest component); Refunds of Contributions; Adjustments; and Premiums.

4. In previous editions of this annual publications, Losses on Realisation of Investments were included under pension funds expenditure, and Profits on Realisation of Investments were included under pension fund income. In this edition, these elements are combined as Net Profits on Realisation of Investment (i.e. profit minus loss), and reported in table 4.2.

Table 4.1 details the total expenditure of the Local Government Pension Funds in Scotland since 2008-09. The trend of pension funds expenditure increases in 2009-10 and 2010-11, followed by a flattening off of expenditure in later years, reflects the underlying pattern of early retirements which increased to a peak in 2010-11 before subsequently reducing.

Table 4.2 - Local Government Pension Funds Income 2008-09 - 2012-13

£ thousands
2008-09 2009-10 2010-11 2011-12 2012-13
Contributions (including those from other employing authorities) Employees 247,052 273,280 276,179 262,811 258,219
Employers 759,185 866,785 958,045 943,698 877,708
Net Profits on Realisation of Investments1 -1,586,702 3,423,702 1,076,163 68,910 2,322,699
Other Income 555,039 458,342 462,169 447,456 717,396
TOTAL INCOME1 -25,426 5,022,109 2,772,556 1,722,876 4,176,022
Total Income excluding Net profits on Realisation of Investments 1,561,276 1,598,407 1,696,393 1,653,965 1,853,323

Source: Local Financial Returns - LFR 24

1. In previous editions of this annual publications, Losses on Realisation of Investments were included under pension funds expenditure, and Profits on Realisation of Investments were included under pension fund income. In this edition, these elements are combined as Net Profits on Realisation of Investment (i.e. profit minus loss), which simplifies interpretation of the data and is more consistently reported by data providers.

2. To reduce the burden on data providers, the categories Investment Income (gross) and Transfer Values used in previous years were combined with 'Other Income' for the 2012-13 data collection.

Table 4.2 shows Local Government Pension Funds Income since 2008-09. Contributions from Employees and Employers are both dependent on the number of contributing employees (full time and part-time) and are both relatively stable over time. Contributions from Employees are fixed at a set percentage of pay, depending on level of salary. Contribution rates from employers are variable and are reviewed on a triennial basis, with actuaries determining the contribution rates for the following three years.

More fluctuation is seen in Other Income and, in particular, Net Profits on Realisation of Investments. Net Profits on Realisation of Investments is influenced by investment conditions (e.g. changes in the stock market) and is clearly the most variable component of the total Pension Funds Income. For example, Net Profits on Realisation of Investments increased from £69 million in 2011-12 to £2.3 billion in 2012-13.


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Email: Euan Smith