View more on these topics

UK pension liabilities increase to £7.6trn

The UK’s total pensions liabilities rose by just over £1trn in the five-year period from 2010 to 2015, according to figures published today by the Office for National Statistics.

From 2010 to 2015 pension liabilities in nominal terms went from £6.6trn to £7.6trn and this includes state pensions, public sector pensions, company pensions and private pensions.

The Government portion of the bill is £5.3trn while the remaining £2.3trn is in private sector schemes, both workplace and individual.

When the £7.6trn is broken down, the largest part was £4trn of entitlements to unfunded state pensions, which are received by the majority of households in retirement.

Unfunded defined benefit workplace pension entitlements for public sector employees were estimated at £917bn.

Funded defined benefit workplace pension entitlements for mainly public sector employees were worth £334bn.

On the private sector side, there are £2trn of funded defined benefit workplace pension entitlements for private sector employees.

This exceeds the £302bn in defined contribution individual personal pensions and £240bn in defined contribution workplace pensions.

Royal London director of policy Steve Webb says the ONS figures should inform the debate about intergenerational fairness.

He says: “The numbers in this report are truly mind-boggling. Today’s population has built up £7.6trn in pension promises but has only set aside about a third of that amount to pay for them. The rest will have to be financed by tomorrow’s workers.

“If we are to have a meaningful debate about how we pay for an ageing population and about fairness between generations, figures like these need to be published on a regular basis and should inform policy making.”

Hargreaves Lansdown senior pensions analyst Nathan Long says the figures have implications for the Government’s white paper on defined benefit pensions, which is expected next week.

He says: “In recent years we have had reform to state and public sector pensions, but a quarter of the retirement entitlements are due for review shortly. There are concerns around the funding, the governance and the efficiency of these private sector defined benefit pension schemes.

Recommended

1

Govt to take on £37.5bn Royal Mail pension liabilities

The assets and liabilities of Royal Mail’s pension fund will be transferred to the Government next month, according to reports. Subject to EU approval, the Government will take on £28bn of assets in the deal which would provide a quick windfall for the Government coffers. But it will also take on £37.5bn of liabilities which […]

8

Govt reveals £1.13trn public sector pension liabilities

New figures from the Treasury show the net public service pension liability stands at £1.13trn, nearly half of all Government liabilities. Released this morning, the ‘whole of government accounts’ are a new way of consolidating financial information from central and local government, the NHS and public corporations in one place. The figures are for the […]

Discount rate on pension liabilities to be reviewed

Chancellor George Osborne says the Government will review the discount rate that is used to calculate public sector pension liabilities as part of the spending review. The decision to consult on alternatives to the current method, which is based on AA bonds, follows a recommendation from Lord John Hutton’s review of public sector provision. In […]

Global equities: time to de-risk?

While equity valuations have doubled since the financial crisis, Simon Edelsten explains that there are still pockets of value. But not where you might think Macro-economic uncertainty is causing turbulence in equity markets. Artemis Global Select Fund manager Simon Edelsten says his investment themes are taking him in a different direction to some of his peers – away […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. That’s just the start. Add PFI (below the line accounts – According to the Adam Smith Institute Unfunded Government schemes have debts of £1.85 trillion), Student Debts (most of which won’t get repaid). Government Debt Stands at £1.56 Trillion (58% of GDP). Personal debt stands at another £1.524 Trillion and so on. Indeed if you take Households, business and Government, UK total debt as expressed as a percentage of GDP is well over 500%.

    We are in fact trading whilst knowingly insolvent.

Leave a comment