Public sector pension liabilities stand at £1.7 trillion, £600 billion higher than the amount calculated by the government, according to a report by The Taxpayers’ Alliance (TPA).
Its report found that the liability facing taxpayers for unfunded public sector pension schemes is higher than the government’s official estimates of £1.1 trillion.
The report also calculated that the real public sector pension liability has grown by more than £1 trillion since 2003-04.
It stated that the government’s estimate of the size of this shortfall is not calculated in the same way as the private sector calculates its liabilities.
Both the government and the private sector will reduce the expected payments in future years by a ‘discount rate’, but these rates are not the same. Instead of using the market discount rates, the government uses a more generous rate determined by a committee.
Jonathan Isaby (pictured), chief executive of The TaxPayers’ Alliance, said: “The scale of the public sector pension liability is enormous, much scarier than the government lets on.
“The situation has rapidly deteriorated over the last decade and will only get worse with an ageing population, meaning our debt mountain will continue to grow.
“Generous final salary schemes in the public sector are too expensive, unsustainable and need urgent reform so that we don’t leave future generations of taxpayers to pay our bills.”