Office of National Statistics estimates UK pension obligations at £7.1trn
UK - The UK’s total pension liabilities are in excess of £7trn (€8.1trn) and nearly five times larger than the British GDP, according to the country’s Office of National Statistics (ONS).
According to calculations, state pension obligations make up more than three-quarters of total government liabilities, with both funded and unfunded obligations incurred through public pension schemes accounting for the remaining £1.2trn of the £5trn in liabilities.
The ONS stressed that all calculations covering obligations until 2010 were produced on a voluntary basis and should be viewed as “experimental statistics”, with refinements expected in future publications.
The undertaking comes as European Union member states seek to comply with the European System of National and Regional Accounts proposed several years ago.
In her introduction, author of the research Sarah Levy of the pensions analysis unit said it was important to note that the ONS did not include any future obligations in its calculations.
She wrote: “As the European Central Bank has pointed out, in order to assess the fiscal sustainability of unfunded pension schemes, ‘the concept of pension entitlements needs to be extended to include entitlements that will be accrued in future, while at the same time comparing these ‘claims’ with future social contributions and tax payments’.”
The report added that the £900bn in unfunded pension obligations amounted to 58% of GDP, while outstanding state pension payments were 269% of GDP.
Examining private sector obligations, Levy said £1.3trn in obligations stemmed from defined benefit schemes, while a further £386bn of assets were located in defined contribution funds.
However, Levy stressed that all figures presented did not serve as an indicator of how financially sustainable the country’s pension system was at present.
Mel Duffield, head of research at the National Association of Pension Funds, added: “These are big figures, but it must be remembered that public sector pensions cover millions of past and current workers and, in the case of the state pension, most of the UK population.”