Britain’s public sector pension bill has exceeded the size of the economy for the first time after rising by £116.7bn in the 2020-21 financial year, data from the Treasury has revealed.

The whole of government accounts revealed that the cost of pensions for public sector workers including civil servants, doctors and teachers increased to £2.3trn in 202-21, higher than the size of the UK economy at that time (£2.1trn in 2021).

Commenting on the data, Broadstone head of market engagement, Simon Kew, said: “The cost of the UK’s public sector pension promises continues to increase.

“Administering, operating and paying out to beneficiaries within these schemes remains a heavy burden for the economy to bear.

"Public sector schemes are, in theory, funded by the current contributions of scheme members however, in practice, that is not how it works.

"The taxpayer is on the hook should there be any shortfall in these schemes – and currently foots about 75 per cent of the bill from the four largest pay-as-you-go schemes.

“The public sector remains unique in continuing to welcome new members to its pension schemes while most private sector plans are closed to new members. It suggests the size of the bill will continue to grow and serious conversations will need to continue around their long-term viability."

However, Kew pointed out that the funding improvements seen throughout the sector since 2022 should "significantly reduce" the liabilities held within these schemes, increasing their sustainability at least in the short term.

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