"...the cost of paying all pensions promises made so far has swelled to £4.9 trillion – almost twice the national debt of around £2.7 trillion"
Telegraph: 18 July 2024: Report exposing true cost of UK public sector pension commitments.
"The public sector pension “Ponzi scheme” will blow a multi-trillion pound hole in Britain’s finances, a senior economist has warned.
Former Bank of England economist and author, Neil Record, said it was an “absolute scandal” that successive governments had failed to confront the “appalling situation” head on.
He warned that when the system finally becomes unaffordable, the Government will need to find money elsewhere to plug the pensions gap – at a cost to taxpayers of £50bn a year and rising...
Salary-linked pension schemes in the private sector must have enough assets to fund the projected amount they will pay out, known as their pension liabilities. They are regularly valued and if they’re not sufficiently funded, a recovery plan is required.
Public sector pensions, however, are exempt. It means that contributions made by employers and employees are not set aside, let alone invested in a fund to pay future pensions.
Instead, retirees are paid from current tax income. This has stored up a series of potential problems – which could one day threaten the entire system, Mr Record said...
...The size of the pensions offered to public sector workers is also controversial. They received the second largest pensions increase in decades last year after inflation soared.
In contrast, private sector workers can only expect a minimum contribution from their employer of 3pc of their salary under auto-enrolment rules. The civil service gives employees 28.97pc.
Another concern is over how many people receive these pensions compared to who pays for them. There are around six million public sector workers and 82pc have a final salary pension. In the private sector, it’s just 7pc..."