THE black hole in Oxfordshire's local government pension funds has swollen to £784m, according to new figures from the TaxPayers’ Alliance.

The pressure group today claimed that the deficit in council employees’ pension funds grew by £274m between 2007-8 and 2008-9, because the value of investments has plummeted in the recession.

The shortfall relates to the amount of money councils believe they need to pay out in pensions to employees, minus the amount of money set aside to pay for them.

Financial analysts at the alliance said Oxfordshire County Council bore the vast bulk of the pension shortfall at £557m.

That is a rise of £181m in 12 months.

The council argued the alliance’s figures were based on nationally determined assumptions.

However, it added it could not give an accurate estimate of the situation until a formal valuation took place later this year.

Council spokesman Owen Morton admitted the alliance’s figure had come from council financial documents.

But he said the pension fund was due to be evaluated this year and until then, the council did not have an accurate estimate of the deficit.

Oxfordshire’s district councils have the following pension fund deficits:

  • Cherwell £42m
  • South Oxfordshire £29.5m
  • West Oxfordshire £22.9m
  • Vale of White Horse £29.9m.
  • Oxford City Council said it could not confirm its pension situation, which the Taxpayers Alliance said was a shortfall of £102.9m.

The alliance has warned the shortfalls could spell bad news for taxpayers if local authorities seek to plug the gap by raising council tax or cut services.

It has called on local authorities to end final salary pensions and cut their employer contributions.

Figures from the councils show they contribute between 16.5 per cent and 24.4 per cent to employees’ pensions.

Employees pay in between 5.5 per cent and 7.5 per cent of earnings.

Alliance campaign manager Mark Wallace said: “These deficits are a huge ticking time-bomb.

“Local taxpayers already pay a fortune for these pensions, and it would be grossly unfair for local authorities to try and plug this gap with yet more tax rises.”

The councils say the schemes will become fully funded in the long-term when the value of financial investments picks up.

Steve Bishop, strategic director for both South Oxfordshire and Vale of White Horse councils, said rules meant shortfalls had to be collected from increased employer contributions rather than employees.

West Oxfordshire District Council spokesman Samantha Simpson said: “Currently the council annually contributes more than the pension fund is paying out each year.

“Any future significant increase in the level of employer contributions would not be sustainable in the longer term.”