A report by the Institute of Economic Affairs (IEA) has warned that the government's pension obligation is GBP817 billion, almost double that of the official figure.

The report suggests that the figure is being fuelled by the increasing number of people employed by the state, and their wages are increasing at close to twice the rate of inflation.

The IEA also claims the government has over estimated future interest levels, accounting for the vast difference between the government’s figure of GBP460 billion and its own.

Government pensions are backed by the state’s promise of revenue from future taxpayers, meaning that any shortfall will either require higher taxes or a lump sum investment from another source.