Public pension liabilities rise
By March public sector pension liabilities will reach £690bn, 60% more than the government's latest estimate, according to actuaries Watson Wyatt.
Pension protection fund threatened
It is the pension schemes of teachers, the National Health Service, the civil service and the armed forces that make up the bulk of the unfunded pension liabilities.
The extent of the liabilities has come to the fore because of the application of the more rigorous, transparent UK rule on accounting for pensions, FRS17.
Stephen Yeo, partner at Watson Wyatt, said: ‘Pension liabilities have been rising in both the public and private sectors. Companies now have to account for their pension liabilities on their balance sheets in a transparent way. Given the enormous size of public sector pension liabilities it is vital that they too are properly accounted for.
In August 2004 Watson Wyatt estimated the pension liability as at 31 March 2004 to be £580bn. The £110bn difference taking liabilities to £690bn is due to an extra year?s accrual (£50bn), use of a lower discount rate (£35bn) and an increased GAD (government actuary’s department) estimate of liability at March 2004 (£25bn).