OBR report reignites public sector pension battle

Unions have claimed today’s Office for Budget Responsibility (OBR) report unfairly presents public sector pension liabilities.

The OBR's Fiscal Sustainability Report said public sector pension liabilities were £1.13trn in March 2010, or 78.7% of GDP.

However, the OBR added the future cash value of pension payouts will fall from 2% of GDP in 2015-16 to 1.4% in 2060-61.

The government is expected to use the public pension liability figures to justify further public sector cuts, but unions have questioned the necessity of proposed reforms as liabilities are already falling.

Brendan Barber, pictured, general secretary of the Trades Union Congress (TUC): "Projecting the government's future liabilities on any area of spending and presenting them as a bill that has to be paid all at once will always produce numbers too big for most people to grasp."

"The National Audit Office (NAO) and John Hutton's review say this is not an appropriate measure of the affordability of public sector pensions."

Tom McPhail, head of pensions research at Hargreaves Lansdown, said the value of public sector pensions was already projected to fall due existing reforms.

These include the indexation of public sector pensions by CPI rather than RPI and the pay freeze on public servants.