A pension funding shortfall of £10bn could mean a sharp hike in council tax or cuts in services in London. A study of the capital's 33 councils has found they all have deficits in their staff pension funds equivalent to their combined annual spending on education and social services. Most councils invested 75% of their pensions funds in shares, the value of which has plummeted by one-third because of the financial crisis. But retirement benefits owed to senior council managers remain high – at least seven chief executives in the city are expecting final salary pensions of £100,000 a year. Experts say the underfunding is equivalent to more than £3,000 for every council tax-paying household. Mayor Boris Johnson said: ‘We need serious pension reform in local government.'
