Britain’s public sector pensions bill is now larger than the size of the U.K. economy after it soared past £2.6 trillion for the first time, official figures show. The Telegraph has more.
The Treasury said NHS pension liabilities alone had climbed above £1 trillion, while the cost of future pension promises to millions of public sector workers including doctors, civil servants and teachers ballooned by £333bn to reach £2.64 trillion in the 2021-22 financial year.
The jump in liabilities was driven by a substantial downgrade to Britain’s growth prospects, which raises the predicted cost of funding gold-plated final salary or career average schemes that offer a guaranteed income on retirement.
Sir Steve Webb, a former pensions minister, described the £2.6 trillion figure as “eye-watering” and larger than the size of Britain’s economy.
He said: “If the economy is growing more sluggishly, then the future wealth of the nation is going to be smaller than you thought. So it’s going to be more painful to pay these promises.”
While millions of public sector workers still benefit from gold-plated final salary pensions, most who work in the private sector rely on defined contribution (DC) schemes that link pension payouts to the performance of financial markets.
There are just 700,000 members of active private sector defined benefit schemes across the U.K., according to the Office for National Statistics (ONS). By contrast, millions of public sector workers still benefit from guaranteed DB schemes.
The Treasury figures show NHS pension liabilities now stand at just over £1 trillion. The scheme, which has more than 1.5 million members, is on course to grow even further in the coming years as the Government implements its workforce plan to increase the permanent workforce from 1.4 million to 2.3 million in 2036-37.
It means one in 11 workers could work for the NHS in a decade.
The figures also showed the estimated cost of funding civil service pensions had climbed from £339bn to £377bn in 2021-22. Pension provisions for NHS staff, teachers, civil servants and the armed forces account for most of Britain’s unfunded pensions liabilities.
Read More: Public Sector Pensions Bill Hits Record £2.6 Trillion – Larger Than the U.K. Economy