UK public sector pensions will cost four times more than previous estimates, new government figures have revealed. A total of GBP81 billion will be needed this year to fund the pensions.
The dramatic increase comes after the government changed the way it calculates estimates to be in line with the private sector. The costs could continue to rise however, as the government’s policy is not to set aside money now but to pay the bill from future taxes. This means that the final bill could cost up to GBP800 million in the decades ahead.
Public sector pensions in the UK have been under scrutiny recently after the government said that the age for retirement would remain at 60 for some, while raising the possibility that the private sector retirement age would increase to 68.
Many private sector schemes have been forced to shut after poor investment returns and longer life spans left funds with huge deficits, whereas public sector pensions are still based on final salaries rather than stock market returns.
A Treasury spokesman said: These figures do not represent the official measure of public sector pensions liabilities. Actual cash payments due each year from government to pay for liabilities that have been built up over decades and are due to be paid out over decades, are not affected by actuarial and accounting changes to discount rates.
Clearly these figures may go up over time. But we make no apologies for employing tens of thousands more doctors, nurses and teachers.