Pension liabilities in the UK grew to a massive £7.6 trillion by the end of 2015, new government data has revealed.
Data published today by the Office for National Statistics revealed that the gross pension liability deficit of UK pension providers grew by £1 trillion between 2010 and 2015.
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The largest part of the 2015 total was £5.3 trillion of pension entitlements that were the responsibility of central and local government, equivalent to 279 per cent of gross domestic product (GDP).
The majority of that total consisted of £4 trillion of unfunded state pensions, equivalent to 213 per cent of GDP.
Martin Jenkins, head of pensions at law firm Irwin Mitchell, said: “If the UK were a PLC the shareholders would be getting worried by now.
“The government is funding these schemes at a fairly low rate compared with their true costs. If you take the NHS pension scheme, the employer pays 16 per cent whereas the actual funding costs of those benefits would be more like 20-30 per cent.”
Over £2 trillion in pension liabilities were not the responsibility of government, equivalent to 124 per cent of GDP.
The majority of that deficit consisted of defined benefit workplace pension entitlement for private sector employees.
However, a DWP spokesperson said:
“These statistics are a snapshot in time, and do not take into account future National Insurance contributions and the recently announced timetable to increase the state pension age, which is reviewed each parliamentary term to ensure it remains fair and sustainable.
“The vast majority of private pension schemes are working well, and continuing to help in providing a secure retirement for millions of people.”