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Did the government hide the full cost of private sector pension schemes?

A report by the Public Sector Pensions Commission, set up by the Institute of Directors and Institute of Economic Affairs, has today accused previous UK governments of "hiding" the true cost of public sector pension schemes. It was widely accepted that employee and employer contributions totalled around 20% of salary but the Public Sector Pensions Commission believes this figure is nearer 40% when you take into account the discount rate based on current index-linked yields. So did the government hide the true cost of public sector pension schemes?

Whether or not previous governments have hidden the cost of pension schemes in the public sector is a matter of opinion but the fact is that a reduction in investment returns, the fact that the UK population on the whole live longer than ever before and increasing salaries in the public sector are starting to take their toll. Depending upon which figures you believe, there is potentially in excess of £100 billion of liabilities for the UK taxpayer in relation to public sector final salary pension schemes, which are only partly funded by employees.

The old argument that wages in the public sector have historically been below those in the private sector is something which has been shown to be untrue in many cases.

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