The pension bill for UK public sector workers has risen to almost GBP1,000 billion according to an estimate from actuarial consultancy Watson Wyatt.
The figure is almost double the most recent government estimates and is based on the size of the provision the government would have to make if it were to fund its pension schemes in the same way as a private company rather than paying out of taxes every year.
The estimate of GBP960 billion from the actuarial firm is higher than the government’s own, which currently stands at GBP530 billion. Watson Wyatt used a discount rate used on the liability of 1%, equal to the risk-free yield on government stock, which it claims is more appropriate than the government’s 2.8%.
A Treasury spokesman said: What matters are the actual pension payments by government, which as a percentage of GDP are exactly the same as set out a year ago. In estimating the total accrued liability of unfunded public service pensions, the government follows guidance approved by the Financial Reporting Advisory Board.