In this report, IF calls attention to the massive unfunded liabilities for public sector pensions which successive governments have placed on the shoulders of future generations. These are currently worth an eye-watering £1.2 trillion, which is the equivalent of £45,000 per UK household, and no money is being put aside to pay them – in effect, they represent a bill which will have to be paid out of future taxation.
The report argues that recent attempts at reforming public sector pensions have not gone far enough to address this huge burden. Deals between the government and public sector unions have resulted in a situation which protects the status quo for older workers who are currently nearing retirement while ensuring that younger public sector workers will be treated far less generously. They have also preserved a situation in which the vast majority of public sector workers are still able to receive defined-benefit pensions, while most workers in the private sector have been left with far less generous defined-contribution arrangements.
IF argues that more needs to be done to protect the interests of future generations, who have been all but ignored during public sector reforms until now.