Lower pension contributions could plug £6 million gap in Powys council's 2026/2027 budget
Lower employer pension contributions by Powys County Council could plug a budget gap next year of up to half of the £12 million needed to maintain a balanced budget
Documents released by the council ahead of next week’s Liberal Democrat/Labour Cabinet meeting show the need to find just over £12 million in cuts and savings next year.
The draft proposals explained that the council will have a £390.514 million budget for next year – and an actual need for £402.547 million.
This leaves a gap of just over £12 million which will need to be filled by cuts and savings.
The papers show that £5.5 million to £6 million of the total £12 million could be saved in lower pensions contributions.
Within the multitude of documents that are part of the budget papers, one sets out the cost reductions and savings put forward by each department.
Contained in this is a line from Corporate Services that said: “Based on actuarial review and assumption of fully funding the deficit, potential for reduced contribution rate – £5.5 million.”
This is also referenced in another budget document – the Medium-Term Financial Strategy (MTFTS) for 2026 – 2031 – which expands on the potential saving.
On pension costs the MTFS said: “Powys Pension Fund’s actuarial review was finalised in early 2026 which saw a decrease in employer contribution rates for the council.
“The change in contribution rates is reflected in the councils budget plan with a saving of £6 million expected over the next financial year.
“The next review will take place in three years’ time.”
And there could be more savings coming in this area as the documents adds: “The Teacher’s pension scheme (TPS) was subject to its actuarial review with increased rates from April 1, 2024, fully funded by Welsh Government.”
It is a statutory requirement for a valuation to be carried out every three years on local authority pension funds.
The purpose of the review is to monitor the assets against the current value of the liability of the pension benefits earned to date, and to review the employer contribution rates.
Following the Cabinet meeting on Tuesday, January 20, the draft budget will start on a long journey through several scrutiny meetings where backbench councillors can have their say on the proposals.
At the end of the five-week process the final draft proposals will be voted upon by all councillors at a meeting on February 26.
Actuaries are mathematicians that use skills in calculus, probability and statistics.
They provide advice on how to deal with financial risks in several sectors, including pensions and insurance.
