Colchester Council spent more than £5million paying for the pensions of its staff and retired employees in 2010/11, new figures reveal.

The authority has had to increase the amount it spends on former workers because they are living longer.

Payments to current workers and former employees topped £5million for the first time, a move that helped to cut the deficit from £71million to just under £60 million.

In 2012/13 the council plans to spend about £2.2 million in contributions and a £2.6million to try and cut the deficit.

Budget papers, which will be discussed at a meeting next week, say a further £97,000 needs to be found.

Paul Smith, councillor responsible for resources, said: “It is needed to fund the costs of pensions that people have already got.

“It’s because people are living longer and we have to put more money in.

“It’s one reason why there needs to be reform of the local government pension scheme.”

Colchester Council has seen its Government grant in 2011/12 cut by nine per cent, which has been exacerbated by a lack of income coming from car parks and poor returns from investments due to low interest rates.

Mr Smith said while a series of service reviews were helping to make savings officers were still looking at a list of cuts that may have to be made.

He said: “We’re having to revise all the decisions we made last year and go further down our pain list and say these are the savings we need to make.

“We’re hopeful that, because we’ve been able to plan ahead, we can close a lot of the budget gap by savings we planned a year or two ago.”