23
Accepted
We pressed the Treasury on whether the Government should be exploring alternative ways of paying...
Recommendation
We pressed the Treasury on whether the Government should be exploring alternative ways of paying for or funding public service pension liabilities. The Treasury responded that public service pensions remain unfunded, pay-as-you-go schemes as this is consistent with Government’s overall approach to managing the balance sheet.43 And that therefore this was not something the Government were actively looking at changing. It also pointed out that the pension liability is paid for from tax revenue, but [future] tax is not recognised as an asset.44 Non-coterminous reporting dates
Government Response Summary
The government agrees with the recommendation but indicates that existing measures, such as the public service schemes introduced in 2014-2015 with changed retirement ages and contributions, and the ongoing Cost Control Mechanism, already address the need to manage public service pension liabilities.
Government Response
Accepted
Government Response
Accepted
HM Government
Accepted
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.
Source
Committee
Public Accounts Committee
Report
69th Report - Whole of Government Accounts 2023-24
04 Mar 2026
HC 1243
Addressee Bodies
HM Treasury
Timeline
Recommendation age
0.4 yrs
Report published
04 Mar 2026