Public sector pension costs to rise by £11.3bn more than expected
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The cost of public sector pensions is set to increase by £11.3bn more than forecast over the next five years.
The revised forecasts from the Office for Budget Responsibility, published as part of yesterday’s autumn statement, suggest an extra £11.3bn over the next five years to fund public sector pensions, compared to forecasts made in the Budget (see table below).
The OBR puts the increase down to higher than expected inflation and more public sector workers, particularly nurses and teachers, retiring early.
Public sector pensions costs are forecast to rise by an extra £1.3bn in the current year to March 2012, by an extra £2bn in 2012/13, an extra £2.4bn in 2013/14, an extra £2.8bn in 2014/15 and an extra £2.8bn in 2015/15.
The consumer prices index measure of inflation stood at 5.2 per cent in September, the month on which civil servants’ inflation-linked pension rises are based.
A higher than expected number of employees within the NHS and local education authorities are retiring earlier than expected, triggering a greater number of lump sum payments on retirement and higher retirement payments overall.
The news comes ahead of widespread public sector strikes over pensions taking place today. It is thought that up to million public sector workers will take part.
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Readers' comments (4)
John Lacy | 30 Nov 2011 11:33 am
Doesn't this reinforce the need for the government to curb this ever increasing drain on tax revenue?
I suppose our union brothers want us to borrow extra to keep them and their members in a scheme that would never be affordable to a private sector company
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Anonymous | 30 Nov 2011 7:21 pm
I didn't hear anyone in the private sector complaining when their salaries knocked spots off mine when I worked in the public sector!
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Trevor Williams | 6 Dec 2011 1:36 pm
This is surely smoke and mirrors! HMG is cutting public service jobs. The older people are going and of course if they're old enough, their pensions are being paid now. But it's a case of lower pensions now rather than the higher pensions that would have been paid in a few years time. Future figures should be lower because the 'cost' has been brought forward.
Perhaps I should have said lies, damned lies and statistics!
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Phil Castle | 6 Dec 2011 3:12 pm
To Anonymous | 30 Nov 2011 7:21 pm
If you woudl care to look at the ONS statistics (compiled under NuLibor) you will see that Public Sector average earnings compared to privtate sector earnings (and these exclude benefits such as pensions, sick pay etc) have increased year on year since Labour came to power so that by the beginning of this year they were 16% higher in England and a whopping 40% higher in Northern Ireland
But don't let the facts, prejudices and green envy get in the way of a good strike or riot..... eh
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