The figure for the combined liabilities of all the final salary pension schemes in the UK has tipped over the £1 trillion mark.

The estimate comes from Aon Consulting following news that the combined pension liabilities in company accounts for the 200 largest UK privately sponsored pension schemes has reached £500bn for the first time. This increase in accounting liabilities has been attributed by the firm to declining corporate bond yields, which are now beginning to normalise.

Although the recent trend of final salary scheme closures will help to manage future benefits, Aon said benefits already awarded to members are continuing to rise and must be managed effectively.

"There have been several high profile cases of schemes closing to accrual, but this only manages future costs and does nothing to eliminate existing liabilities," commented Marcus Hurd, head of corporate solutions at Aon Consulting. "Liabilities have reached such a staggering high because they continue to balloon in the aftermath of the credit crunch. What's more, there could well be more bad news in the pipeline. Despite improving equity markets, the only real guarantee for pension funds is further volatility as gilts and bond yields are set to fluctuate."

Hurd added that while closure is often the first step in managing pension schemes, the real benefits come after a structured approach to remove and manage liabilities through risk management. "The aim should be to ensure that all pension scheme members get the benefits they are promised, whilst minimising the burden on the company."

Towers Perrin added that the pension fund deficits of FTSE 100 companies increased by £8bn over August, from £70bn to £78bn.

"While liabilities continue to increase there could be light at the end of the tunnel for UK plc," said Mark Duke, head of pensions at the global professional services firm. "If higher equity values signal a more general economic recovery, then Companies may be better placed to cover this pension problem. That said, the next few months are crucial. Companies will be keeping a careful watch on corporate bond yields and inflation expectations as the year-end accounting deadlines approach."

Meanwhile, PricewaterhouseCoopers LLP (PwC) has found that private sector workers who wish to achieve a pension of equal value to that in the public sector could need a total employer and employee pension contribution rate of around 37 per cent of their salary.

A report by the professional services firm shows that private sector workers in defined contribution (DC) schemes receive on average employer contributions of around six per cent of salary. Civil servants who contribute only 1.5 per cent of salary to their final salary pension schemes, however, could see employer contribution rates of 35.5 per cent of salary.

John Hawksworth, head of macroeconomics at PwC, said: "Our public sector tortoise has an implied total pension contribution rate nearly four times as high as our private sector hare (37 per cent vs. ten per cent) and an implied public sector employer contribution rate of 35.5 per cent of salary.

"There are implications here for both public and private sector employers. A generous final salary pension is a great draw to talent for a career in public services, but it also has drawbacks in limiting the flow of people between the public and private sectors. People with long civil services careers may be very reluctant to leave the scheme, especially now that it is rare to find anything comparable in the private sector."

Hawksworth added that this places a burden on the taxpayer, with the baby boom generation of civil servants now beginning to retire.

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