UK at odds with Watson over liability estimate
UK – The UK government says it takes issue with Watson Wyatt’s estimate that the UK’s unfunded public sector pension liabilities are almost 600 billion pounds (888.8 billion euros).
Last week consulting firm Watson Wyatt estimated the UK’s unfunded public sector pension liabilities are around 580 billion pounds – up from the most recent official estimate of 380 billion pounds.
“We would take issue with that slightly,” said Louise Mason, spokeswoman in the Office of the Deputy Prime Minister, which oversees local government.
“What we would say is that public sector pension schemes are set up and operating a different way to company pension schemes. The long-term statutory nature of pension funds mean they don’t have to deal with liabilities immediately.”
At issue was the way local government schemes manage those liabilities, she said. She pointed out that the Local Government Pension Scheme in 2002-03 had a net income of 2.3 billion pounds.
The Local Government Pension Scheme is currently undergoing change, with proposals to amend the fund set to come into force in April 2005.
Under the plans, which go to Parliament in the autumn, the minimum age at which benefits can be paid will be raised to 55 from the current 50 – although not for current members born before April 1 1955.
Roy Wilson, chairman of the Local Government Pensions Committee, said: “We have considered the proposals carefully and have sought to balance the views of the employers that we represent.
“Whilst we believe that the basic structure of the Local Government Pension Scheme as a final salary scheme is best placed to deliver the security of the pensions promise to the local government workforce we recognise that the Scheme must be regulated on the basis of fairness and affordability.”
T B J Crossley, the head of the government’s Local Government Pensions Division, has written to local authorities to say that press reports about the future of UK public service pension provision raise “spurious and unnecessary questions about the scheme’s future which in turn provokes alarm within the membership”.