‘Eye-watering’... £1trillion cost of NHS pensions to taxpayer
THE public sector pensions bill has reached a record £2.6trillion, Treasury figures show.
NHS liabilities alone climbed above £1trillion in the 2021-22 financial year.
And the cost of future retirement promises to millions of public sector workers including doctors, civil servants and teachers ballooned by £333billion to hit £2.64trillion.
Benjamin Elks, grassroots development manager at the TaxPayers’ Alliance, said: “Buried in Government accounts was the revelation the liability for the NHS pension scheme has exceeded £1trillion for the first time.”
Writing in today’s Daily Express, he adds: “That means the Government owes the equivalent of a whole year of public spending to NHS employees in the form of pension payments.
“All paid for by taxpayers. There is no separate piggy bank, no pension fund that will be used to pay for it.”
Assumptions
Most who work in the private sector rely on defined contribution schemes that link pension payouts to the performance of financial markets.
But millions of public sector workers still benefit from guaranteed defined benefit schemes.
Most DB pensions don’t rely on a saved pot of money. They pay income from the start of retirement until death and often also a tax-free lump sum.
How much is received depends on pensionable service, earnings (either salary at retirement or average salary over the period of scheme membership) and the scheme’s accrual rate.
The NHS scheme, which has more than 1.5 million members, is set to grow in the coming years when the Government implements its workforce plan to increase permanent staff from 1.4 million to 2.3 million in 2036-37.
Former pensions minister Sir Steve Webb, now a partner at consultants LCP, said: “There is no doubt the cost of meeting all of the promises which have been made to public sector workers is an eye-watering number.
“But this can change dramatically from year to year – not because of changes in the generosity of the schemes but rather because of changes in economic assumptions.
“If the Government thinks the economy is going to grow more slowly then there will be less money to pay pensions in the future.
“This means more money is notionally set aside for the burden of these pension promises in Government accounts. There is no actual fund of money set aside to pay these pensions and the costs will fall on each successive generation of taxpayers.”
The Government said: “We have reformed public service pensions – saving £400billion. They are an important part of the remuneration package for public sector workers and the reforms strike the right balance between rewarding crown servants and being fair to the taxpayer.”