Pensions minister Steve Webb has dismissed “ludicrous” claims from trade union Unison that public sector pensions are sustainably funded.
At a fringe meeting at the LibDem conference, Unison West Midlands secretary Ravi Subramanian highlighted that the funds are in surplus this year.
Subramanian said the local government pension scheme has £165bn-worth of assets and brings in £4bn a year more than it pays out, which he argued should “nail the myth” the scheme is unsustainable.
But Webb said this failed to take into account the scale of payouts necessary to meet commitments to future pensioners. He said: “I cannot let what you just heard about public sector pensions go, there is so much disservice to the truth I cannot even begin to start.
“Ravi is debunking myths but adding half a dozen others. On the whole, the number of local government workers is going down and the number of people in pensions is going up, so the idea that it is in surplus because this year we can cover our costs when we have made all these promises and we cannot pay for them is just ludicrous.”
Contributions to unfunded public sector pension schemes and the benefits they pay are run through the general taxation pot rather than held separately like the funded local government scheme.
Webb said reform is vital to deliver fairness to taxpayers.
He said: “Contributions to teachers’ pensions started at 5 per cent from the teacher and 5 per cent from the employer. It is now 6.5 per cent and 14 per cent.
“The employer is the taxpayer and two-thirds of taxpayers do not have a pension. Does there ever come a point where we try and rebalance this? I think there does.”