The government has published figures that show public sector pension liabilities are predicted to increase from £770 billion to £1,133 billion in two years.
The Treasury’s Whole of Government Accounts also stated that the net public service pensions liability depends critically on the discount rate used to convert the future flow of expected cash payments into a one-off upfront sum. The lower the discount rate, the higher the present values of future cash payments and the higher the total liability.
Brendan Barber, general secretary of the Trade Union Congress (TUC), added: “These figures are a nakedly political attempt by the government to strengthen its hand in the negotiations on public sector pensions, after its continued failure to sustain the argument that they are unaffordable.
“These numbers may well be scarily big, but they are close to meaningless. Both the National Audit Office (NAO) and John Hutton’s review say that this is not an appropriate measure of the affordability of public sector pensions. Small variations in assumptions can produce huge differences in this figure, even though the payments remain the same.”
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