The cashflow shortfall between public service pensions’ contributions and pensions in payment is set to rise to £16.2bn in 2017-18, Centre for Policy Studies (CPS) research fellow Michael Johnson has warned.

Using the Office for Budget Responsibility’s (OBR) forecasts that were outlined before Lord Hutton’s public service pension reform proposals, Johnson stated that 2011 Budget forecasts were £5.8bn rising to £9.7bn in 2015-16.

However using figures, published in the 2013 Budget Red Book, the analyst emphasised that the cashflow shortfall is expected to rise to £13.6bn in 2015-16.

In an article on the CPS website, Johnson stated: “This is indicative of successive government’s talent for understanding the cost of providing public service pensions.”

He also added that when (taxpayer-funded) employer contributions are added to the burgeoning cashflow shortfall this amount will play a major part in the likely situation where the annual cost of providing public service pensions will be over £1,500 per household by 2016.

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