KCC Technically Insolvent and a 25% Increase In Their Pension Deficit.
shepwayvox
When a chief executive officer of a private company doesn’t meet the number – make the company grow, they are usually asked to move on, as they have failed to meet the objectives and targets the company have set. This is the real world.
At Kent County Council, it seems this law does not apply.
A balance sheet is a snap shot of an organsiation on a set date. For KCC this date is always the 31st March of any financial year.
According to the draft statement of Accounts 16/17, the balance sheet as of March 31st 2016 stood at £245 million and by 31st March 2017, fell to -£36.8 million
This means that KCC are technically insolvent. This does not mean that KCC are going to go bust as it can’t meet pay its bills. Council’s such as KCC cannot go bankrupt or become insolvent, hence do not live in the real world. The reason KCC give regarding the sharp fall in the balance sheet is mainly due to the increase in the pensions liability.
KCC pension liability is on page 101 of the Statement of the Accounts and it makes clear that it has risen from £1.2 billion to £1.5 billion. This pension black hole has risen 25% in one year. And in particular it is mainly the defined benefit pension scheme which has caused the alarming rise.
The defined benefit pension scheme is the Rolls Royce of pensions in the public sector, as it pays out a secure income for life which increases each year.
However, that said, as KCC have laid and continue to lay off people that means less contributions are available to go into the pension pot. This means that the black hole in the pension fund will probably grow, rather than shrink; which if you are a KCC employee is rather worrying.
The World has gone mad and are KCC’s pension investments exposed to stock exchanges?
As we said, in the real world of private companies if the net worth had dropped so dramatically, the CEO would no doubt lose his job. However, Cllr John Simmonds Cabinet Member for finance (pictured) and Corporate Director of Finance – Andy Wood, (pictured) remain safely ensconced in their positions. The fact that KCC were technically insolvent on 31st March 2017 and the fact that the pensions liabilities grew by 25% in a single financial year, KCC members who oversaw this alarming growth in the pension deficit and technical insolvency, elected to give themselves a 15% pay rise
