A black hole of more than £400m has been revealed in Lambeth Council's pension fund, prompting fears council tax payers could end up having to plug the gap.

The latest statistics show Lambeth Council had a deficit of £411.9m at the end of March 2009, one of the highest shortfalls of all London boroughs.

Only Southwark and Brent councils were showing greater shortfalls, of £450.3m and £478.9m respectively. Lambeth’s neighbouring boroughs Merton and Wandsworth showed deficits of £123.6m and £143.1m.

The Evening Standard, which looked into the pension deficits of all London boroughs, claimed the councils were failing to put enough money aside to pay guaranteed retirement benefits to tens of thousands of former workers across the capital.

And Councillor Ashley Lumsden, leader of the Liberal Democrat opposition, said Lambeth pensions were in “real trouble”.

He said: “In the 80s and 90s the council took pensions holidays and stopped funding its pension fund. Now they are suffering for that.

"The payments are guaranteed under law so they can't reduce benefits, which means the council tax payer has to make up any difference.

"They have got to try to improve investments and get a better risk profile, but it is very difficult. People are living longer and the Government scheme is so good that nearly everyone who is entitled to it, takes out the pension."

But a spokeswoman for Lambeth Council said the figures were “unnecessarily alarmist”.

She said: "The most recent (end of December) external benchmarking of the pension fund saw Lambeth's pension fund rated 11th out of 108 funds and fourth in London for three year average performance returns.

"The figure reported in the Evening Standard is the worst case scenario, a total market meltdown, and should not be taken as an accurate figure of the current situation."