In an analysis of the government’s balance sheet, the National Audit Office highlighted that although a host of government reforms had helped to generate cash and reduce pension costs in the longer term, the overall liability stood at around £1,493bn across more than 100 legally separate schemes in the 2014-15 Whole of Government Accounts.
This made it the single, largest liability on the government’s balance sheet, today’s Evaluating the Government Balance Sheet report concluded.
Auditors stated there was a limit to the level of pensions the government can finance annually without having to reduce spending in other areas or increase income through higher taxes or further borrowing, but the government had reformed some schemes more than others.
Most recent changes included increasing the retirement age, changing the measure of inflation used to calculate pension increases from Retail Prices Index to Consumer Prices Index and moving to a career average rather than final salary pension.
However, the pension liability has risen by (32%) since first being reported in the WGA in 2009-10 due to adjustments to reflect changes to the discount rate that is applied to reflect today’s prices, the review concluded. As public service reforms potentially increase the scale of private sector access to public sector pensions increases, such as through academy schools, Whitehall must ensure its oversight framework is effective across both current and future exposure to risks.
