UK pension liability exceeds £7trn, ONS says
Figures from statistics provider show liability at the end of 2010 was almost five times UK GDP.
Total pensions liabilities in the UK exceeded £7trn at the end of 2010, figures from the Office for National Statistics (ONS) show.
The figures, which have experimental status so are not yet officially ONS data, show that £5trn was liable to be paid by the government at the end of 2010 and £2.1trn by the private sector.
Of the government figures, £3.8trn was in respect of state pensions, representing 263% of gross domestic product (GDP). The most recent comparable figure for EU-wide obligations, for end-2007, was 278% GDP.
The data is based on accrued-to-date pensions obligations, meaning it takes account of contributions received but does not project for future contributions.
UK private sector obligations for workplace schemes were £1.7trn, 118% of GDP.
Asked whether the figures were reasonable in respect of the GDP, Sarah Levy of the ONS pensions analysis unit said she could not comment on the scale of the figures.
Paul Johnson, director of the Institute for Fiscal Studies, said, “I think there is a danger that the numbers on the front page are misleading.”
He said while the UK government’s obligations were lower than the EU’s latest available data, the EU data might be skewed by countries whose pension obligations are even greater than the UK’s. However, he added it is difficult to put the figures into a meaningful context.
“Is £5trn liability going forward a big number? I don’t know,” he said. “There is a problem with thinking about these numbers: what do we mean about the sheer scale of them?”
The data is the first set of official statistics on total liabilities of UK pension providers. This data will have to be provided in future for the national accounts and to meet European requirements. The ONS said data for 2010 has been collated voluntarily ahead of the requirements coming into place and that the UK is the first EU country to publish.
aimee.steen@ft.com