The UK government has been accused of pulling the wool over taxpayers' eyes following claims "fictitious surpluses" were used to boost government funds from two of the UK's largest pension funds.
As the ultimate guarantor and sponsor of the schemes, the government receives a 50% share in surpluses, with the schemes' members sharing the rest in the form of an annual bonus.
Charles Cowling, managing director of Pension Capital Strategies, said the surpluses were another classic example of the government misrepresenting public finances, while former Downing Street adviser Ros Altmann claimed these types of assumptions were happening across all public sector accounting.
Altmann said: "The government does not fund pensions properly and uses actuarial assumptions to try to achieve the results it wants.
"Pensions are a convenient cash cow for government. They are passing yet more liabilities on to future generations and indeed future politicians without providing for them and without being transparent.
"It is high time the government accounted properly for all public sector pensions because ultimately they are leaving future tax payers to deal with the costs."
According to Ralfe's calculations, the schemes currently have a combined £1.9bn surplus based on an "expected return on assets" calculation by the government actuary, but on the basis of the index-linked gilt rate that surplus becomes a £900m deficit.
He agreed taxpayers would inevitably be forced to foot the bill. He said: "The actuaries' 'magic pencil' has virtually disappeared in private sector pensions because of accounting requirements and taxpayers deserve transparency in public sector pensions to allow them to understand the real cost and risk they are running."
A spokesperson for the government declined to comment.
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