Total state pension payments are expected to decrease by £600m in 2020/21 due to excess deaths caused by Covid-19, according to the Office for Budget Responsibility (OBR).

In its Economic and fiscal outlooks report, the OBR stated this was a £500m increase on the estimate in its July Fiscal sustainability report (FSR).

“We assume that two-thirds of this year’s excess pensioner deaths are brought forward from within the next five years and the remainder from beyond the forecast horizon, informed by analysis published by the National Institute of Economic and Social Research", the report stated.

Public service pension payments are expected to be £1.3bn lower in 2020/21 than estimated in its FSR central scenario before accounting for the effect of government decisions, largely due to an increase in contributions from a larger NHS pensionable paybill in response to the pandemic.

The OBR stated that the cost of this in terms of higher future pension costs will be felt beyond the forecast horizon.

The government’s income from annual and taper allowances will decrease by an average of £100m (14 per cent) a year, from 2022/23 onwards, to reflect lower CPI inflation and earnings forecasts, according to the OBR.

Furthermore, it revealed that the Treasury was planning a consultation response and policy decision on the McCloud ruling in the new year, with the government’s latest estimate for the increase in public service pension liabilities being £17bn.

The government also confirmed its commitment to the state pension triple lock, with the OBR assuming a 4.1 per cent uprating in April 2022, in line with earnings growth.

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