The estimates issued on Friday are the first set of official statistics on the gross liabilities of UK pension providers – including government – and reveal that the total obligations are nearly five times the UK’s gross domestic product.
More than two thirds (£5trn) of the accrued-to-date liabilities at the end of 2010 were the responsibility of the UK government, with the remaining £2.1trn private sector obligations.
Of the government’s obligation, £3.8trn was in respect of state pensions. This was equivalent to 263% of GDP. The most recent estimate made for the European Union as a whole, in 2007, was equivalent to 278% of GDP.
In total, £1.2trn of the government obligation was in respect of funded and unfunded workplace pension schemes – the vast majority (£0.9trn) unfunded.
Private sector obligations in respect of workplace pensions – all of which were funded – were estimated at £1.7trn. This is equivalent to 118% of gross domestic product, the ONS said.
According to the ONS, the UK is the first EU country to publish figures on its total pension liabilities, but from 2012 all member states will be expected to include the information in their national accounts.