The promise of a lifetime

It is easy to lose money down the back of the sofa, less so to lose a debt.  The Treasury has long tried to hide the value of the pension promises made to public sector workers. Now, though, the present administration or its successor must start to be honest about the true size of the liability which our report today reveals, because, at £1.1 trillion (or 78% of GDP), it is now bigger than the national debt (which stands at £750 billion).

It has got this big for several reasons. First, when the government receives contributions from public sector workers for their pension schemes, it spends the money on schools, hospitals and suchlike. Second, even though it does this, the Government still needs to borrow money to pay for all the promises it has made. But when it borrows this money and comes to pay the interest on it, it rolls the interest payments into the total liability.