UK pension liabilities hit £7.6 trillion

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.

Read more: Pension planning is more important than ever

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.”

Read more: The risks of pension drawdown – and how to help combat them

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.