This is a question that seems to be growing in importance in discussions about Public finances. Is the system of pension arrangements provided to the Public Sector employees fair when compared to that in the Private Sector, or is there ‘pensions apartheid’? As it turns out, the Office for Budget of Responsibility (OBR) think, as a country, there is a ‘surplus’. Is this a case of ‘robbing Peter to pay Paul’?
Here is what they say in their Economic and Fiscal Outlook – November 2025, published around one hour before the 2025 Autumn Budget:
“The surplus on unfunded public service pensions, which is expected to rise from a £0.3 billion surplus in 2025-26 to a £3.8 billion surplus in 2030-31. This is due to forecast growth in the public sector paybill boosting scheme receipts more quickly than the growth in scheme expenditure, which has been linked to CPI inflation since 2011-12. This continues a longer-term trend, where the net cost of unfunded pensions fell from a £5.7 billion deficit in 2010-11 to a £0.8 deficit in 2024-25, driven by public sector pay rises and an increase in the number of public sector employees.”
CP 1439 – Office for Budget Responsibility – Economic and fiscal outlook – November 2025