Oral question asked in the House of Lords, by Lord Fowler (Conservative). It was answered on Thursday, 9 March 2006.

Pensions: Public Sector

Question: My Lords, that is a vast unfunded debt. The Minister will have seen estimates in the press today showing that the true figure could be substantially higher. Does that not show how foolish and unjust it was for the Government to have gone back on their pledge to immediately move to increase retirement ages past 60 in the public sector, particularly when they are urging those in the private sector, who will help pick up the bill for the debt, to work beyond the age of 65?

Answer: My Lords, that is not a fair statement of the current position. The deal agreed by the Secretary of State for Work and Pensions last year delivered all the savings that the Government originally targeted from the change in pension ages for the NHS, teachers and the Civil Service. As the deal makes clear, however, that is only part of the reforms needed. You can arrive at any figure for the unfunded liability. It depends on the discount rate that you use, and some of them have been quite silly. The key point and test, given that these are unfunded issues, is whether they can be met from public expenditure on an ongoing basis. The long-term forecast shows that, over 50 years, the percentage of GDP spent on these unfunded pensions will rise from the current 1.5 per cent to 2.1 per cent at the end of the 50 years. That is perfectly sustainable under the forecasts.

Secondary information

Type: Oral question
Reference: 679 c862
Session: 2005-06
Oral question type: 1st Supplementary
Chamber / Committee: House of Lords chamber
Subjects: Debts Age Workplace pensions Public sector Pension funds Retirement
Link: View this Oral question on www.publications.parliament.uk