Figures released by the Treasury in ‘Take out the Trash Thursday’ reveal that Britain’s public sector pension bill has exceeded the size of the economy for the first time.
The cost of pensions for millions of public sector workers including civil servants, doctors and teachers rose by £116.7bn in the 2020-21 financial year, according to figures published by the Treasury on Thursday, taking the total to £2.3 trillion – higher than the size of the UK economy at that time (£2.1 trillion in 2021).
Commenting on the data, Simon Kew, Head of Market Engagement at leading independent consultancy Broadstone, said: “The cost of the UK’s public sector pension promises continues to increase.
“Administering, operating and paying out to beneficiaries within these schemes remains a heavy burden for the economy to bear. Public sector schemes are, in theory, funded by the current contributions of scheme members however, in practice, that is not how it works. The taxpayer is on the hook should there be any shortfall in these schemes – and currently foots about 75% of the bill from the four largest pay-as-you-go schemes.
“The public sector remains unique in continuing to welcome new members to its pension schemes while most private sector plans are closed to new members. It suggests the size of the bill will continue to grow and serious conversations will need to continue around their long-term viability.
“The good news is that the funding improvements we have seen throughout the sector since 2022 should significantly reduce the liabilities held within these schemes, increasing their sustainability at least in the short term.”
