UK - Unfunded public sector pension scheme liabilities have jumped by more than 50% to around £580bn, Watson Wyatt claims.
The consultant’s figure is £200bn more than the last official estimate which was published in 2002.
But Watson Wyatt says its has calculated its figures by using a discount rate of 2.8% real, which the government accounts will adopt from 2005-06, instead of the 3.5% rate used previously.
It reasons that as 58% of the accrued liability in the public sector schemes relates to those who have not yet retired, the liabilities are more sensitive to a change in the discount rate than if the schemes had a higher proportion of pensioners.
It has also assumed a 5% improvement in mortality rates, and a continuation of the annual rise in liabilities for the schemes of £30bn a year.
Watson Wyatt senior consultant Stephen Yeo said: “The pressure that has forced the private sector to account for pension costs in a transparent way is only slowly having an effect in the public sector.
“Given the enormous size of the liabilities involved, it is vital that the true cost of all pensions is recognised.”
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