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.
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.