The council pension schemes across London, run by councillors and underwritten by taxpayers, have weak governance standards and make poor investment decisions, the Pensions Institute report claims.
It adds that without change taxpayers will have to pick up the tab to fill the pensions blackhole.
The study said the schemes’ watchdog, the Department for Communities and Local Government, needs to take a tougher line on how indebted the schemes are allowed to become, in order to protect taxpayers.
Report author Professor David Blake: “It is shocking to see the government’s complacency in terms of the regulation of the gold-plated local government schemes.
“It is even more shocking when you realise that private sector employees, who are also council taxpayers, will have to pick up the bill for the poor investment governance.”