The industry was shocked when Chancellor Alistair Darling announced in his pre-Budget report speech on Monday that the lifetime allowance for pension funds would freeze at £1.8m for five years from 2010.
He told MPs: “I intend to maintain the ceiling on tax relief given to people with pension funds of up to £1.8m up to and including 2015/16.”
But data contained in the report and highlighted by the Lib Dems shows the amount of taxpayers’ money going in to civil servants’ pensions has risen from £1.2bn in 2006/07 to £3.8bn in 2009/10.
Liberal Democrat pensions spokesman Lord Oakeshott says the growing disparity between private and public sector pensions is down to either “incompetence or wishful thinking” on the Government’s part.
He says: “At a time when private sector pensions are being cut to ribbons and taxpayers are struggling to pay their bills, these ballooning pension costs are the real future liabilities, not the measures announced on Monday. Every year the Treasury persistently and grossly underestimates the cost of public sector pensions. It must be down to either incompetence or wishful thinking.”