National Audit Office

The cost of public service pensions

A statement from Edward Leigh MP, Chairman of the Committee of Public Accounts:

Today's National Audit Office report is the first independent presentation of the facts bearing on the current and future costs of public service pension schemes - in particular, the four largest schemes, covering the armed forces, the NHS, civil service and teachers.

These figures are intended to improve understanding of future liabilities and help to bring greater clarity to the debate on the implications for public spending, now and many years into the future. The projection that total annual payments to pensioners in these schemes will top £79 billion by 2059-60 is frightening, although, at least as a proportion of forecast GDP, this does not represent an increase.

But it is striking that the Treasury's projections all depend on the heroic-looking assumption that, as the UK's workforce rises and the demand on public services increases, the size of the public sector workforce will stay the same. These figures must be used to inform an urgently needed national debate about public sector pension schemes for new entrants. A second NAO report on public sector pensions, planned for later this year, will look in detail at recent changes to terms and conditions.

The cost of public service pensions - click here to download the full report (PDF 947k).

Please note this report is included in order to inform on the debate surrounding unfunded public sector schemes - the Local Government Pension Scheme (LGPS) is funded and therefore NOT covered by this report - none of the information contained or conclusions reached apply to the LGPS.