Public sector pensions cost an estimated £1.2trn – £20,000 for every man, woman and child in the UK.
According to the British-North American Committee, made up of academics and business leaders, the Treasury is greatly understating the cost of providing gold-plated retirement schemes for public sector workers such as nurses, teachers, the police and Armed Forces.
Neil Record, a former Bank of England economist and pensions expert who helped to draft the report, said: “Neither politicians, the Treasury, nor employees know what public pensions cost – or are worth – each year [or] what the total future taxpayers’ pension liability is,” he said.
News editor analysis
It appears that the government has truly underestimated the cost of public sector pensions, so public sector pay and conditions must surely be reviewed to combat the ever-growing black hole of public debt.
The fact that local government unions are still negotiating this year’s pay rise seems like an increasingly unconvincing argument. Yes, the public sector needs to attract the best and brightest people.
But so does the private sector, and many firms have already introduced pay freezes or a cut in hours this year in response to the economic climate.