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Public sector pensions funding gap "set to double"

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Taxpayers face paying even more to subsidise public sector pensions than previously believed, a new study shows.

The annual cash shortfall related to unfunded schemes is set to double by 2017-18, even after reforms aimed at alleviating the burden on the taxpayer, according to the Centre of Policy Studies.

Official forecasts published with last month's Budget show the cash shortfall between contributions to public service pensions and pension payments will rise from £8 billion in 2011-12 to £16.2 billion six years later.

This is despite changes to public sector pensions following the Hutton Review in March 2011, which included higher employee contributions and reduced benefits.

Contributions have already risen for teachers, NHS workers and civil servants, and further hikes are planned to increase payments by an average of 3.2%.

Michael Johnson, a former adviser to the Conservative Party, said: "Once taxpayer-funded employer contributions, over £16 billion last year, are added to the burgeoning cashflow shortfall, along with additional costs care of the Treasury's 25 year 'no change' pledge, the annual cost of providing public service pensions will be over £1,500 per household by 2016, and rising rapidly."