THE GOVERNMENT’S colossal public sector pension liabilities are even larger than they suggest, according to an alarming estimate by a campaign group.
The Taxpayers’ Alliance (TPA) says that the official estimate for the liability, which runs to £1.1 trillion, is only two thirds of the real burden. According to Neil Record, who conducted the research, the liability is £610bn higher in reality, raising the total to £1.7 trillion.
The TPA says that the difference is due to the government applying a discount rate that is too generous. Instead, Record and the TPA use a market discount rate.
Last year, the group said that there was a £495bn gap between their estimate and the official liability, with the figure rising in most years as the government’s commitments grow.
“The situation has rapidly deteriorated over the last decade and will only get worse with an ageing population,” said TPA chief executive Jonathan Isaby, adding that final salary pensions in the sector are too expensive.