Union officials at Teignbridge Council have confirmed the downturn in the economy has thrown a shadow over the value of staff pensions.

It could also mean the authority having to make greater contributions to cover the shortfall.

A possible knock-on effect on council tax bills has not been ruled out.

Teignbridge employs more than 500 people, many of whom have signed up to the official scheme.

But the recession has hit the investments made on their behalf and in the past year the net worth of the authority has slumped.

This week the draft accounts shown to councillors sitting on an internal financial watchdog, the audit scrutiny committee, revealed the value of the council's assets had fallen from £25.1 million to just £2.2 million in the past year.

The report which accompanied the accounts said this was 'mainly due to the adverse movement on the pension reserve and impairment of asset values'.

Christine Bolton, branch secretary for Teignbridge Unison, said the local concern was being echoed across the country.

'Most local government workers are aware there could be a significant impact on their pensions and the union is keeping a very close eye on the situation,' she said.

'It is far too early to say what could happen however, we hope there may yet be an upturn in the economy.'

A council spokesman said: 'The Devon County Pension Fund holds investments for our employees' pension schemes, and recently the pension investment value has fallen with a corresponding increase in local authority liability.

'At the same time market conditions have resulted in a reduction in the value of Teignbridge Council's property and investments. 

'The fluctuating nature of market conditions can be accommodated given the very long term over which pension fund investments make a return. 

'From time to time we review the contributions we make to the pension fund and we will be looking at this again next year.

'There is no immediate impact on the council taxpayers.'