Azara Blog: Public sector pension costs

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Date published: 2005/02/18

The Financial Times says (subscription service):

The cost of meeting pension commitments forcivil servants, teachers, National Health Service employees and the emergency services has risen so quickly that it now dwarfs the level of public sector debt.

Using principles based on private sector accounting rules, the actuarial consultants Watson Wyatt estimate that unfunded public sector pension liabilities will reach £690bn in March - more than one-and-a-half times the £417bn level of net public sector debt.
Public sector workers have disproportionately generous pensions compared with private sector employees on similar wages.

The 3m employees with unfunded pensions represent just over 10 per cent of the workforce, but the Pensions Commission estimated that they had built up 29 per cent of the accrued pension rights in the UK.

If the additional liability was added to the national debt, it would amount to more than 90 per cent of gross domestic product, not the 34.9 per cent recorded by the Office for National Statistics.

An extremely scary story if even half true. The government needs to act. (Of course Blair and Brown are too busy playing pretend world leaders to worry about the mess they have left behind at home.)

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