22 Deferred

We questioned how 2023–24 pension disclosures appeared to show a reduction in public sector pension...

Conclusion
We questioned how 2023–24 pension disclosures appeared to show a reduction in public sector pension liabilities and raised that this was counter intuitive. We raised concern that this disclosure created presents a false picture of the underlying fiscal reality when the number of scheme members continues to risk and life expectancy trends increase long-term obligations.41 The Treasury acknowledged the Committee’s concern and suggested that the most meaningful long-term indicator of pension affordability is pension spending as a share of GDP. It commented that pensions were currently about 1.9% of GDP and expected to fall to about 1.4% over the next 50 years. The Treasury agreed with the general point about being transparent about different ways of measurement in order to support debate.42
Government Response Summary
Despite the original item being a conclusion, the government states it agrees with the Committee's implied recommendation for transparency in pension measurement and sets a target implementation date of June 2026, while reaffirming its preference for OBR's GDP share measure.
Government Response
Deferred
HM Government Deferred
4.6 The government agrees with the Committee’s recommendation. Target implementation date: June 2026 ... 4.11 The coalition government introduced new public service schemes from 2014 to 2015. The main changes were to increase the scheme normal retirement ages to the state pension age (except for the police, firefighters, and the armed forces who have a normal retirement age of 60), increase member contributions, and move from a final salary to a career average design. Separately, the indexation of public service pensions was changed from RPI to CPI. 4.12 The government also maintains the Cost Control Mechanism, which provides for automatic adjustments to scheme design if certain costs move outside of a set corridor. 4.13 The government’s preferred measure of the cost of the schemes remains the OBR’s long-term projection of spending on pension benefits as a share of GDP, rather than the figure of accrued liabilities, including due to the difficulties in interpreting the liability figure previously noted by the PAC.
Addressee Bodies
HM Treasury
Timeline
Recommendation age 0.4 yrs
Report published 04 Mar 2026