Tougher pensions reporting standards for companies - but what about the public sector?

Today's FT reports:

UK companies face having to add billions of pounds to their pensions liabilities under plans to be unveiled by the regulator to force them to use more realistic projections of how long workers will live after they retire.

The standard the Pensions Regulator is to propose next week is tougher than that used by 99.5 per cent of UK schemes and will increase stated liabilities for companies by 6 to 8 per cent, even for those already adopting the most prudent standard now in use. For roughly a third of all schemes, the increase in disclosed liabilities will be as much as 15 to 20 per cent and could force them to set aside more cash to fill shortfalls.

The regulator has the power to order weak companies to increase contributions to their final salary scheme. It also has the power to intervene on behalf of trustees if the regulator feels that companies are not putting in enough money to close gaps in their pension schemes.

There is nothing inherently wrong with this. Accurate reporting is, like the rule of law, essential to a well-functioning capitalist economy. But what about the public sector pension schemes? Unfunded public sector pension liabilities are anything from £530 billion (Treasury) to over £1 trillion (Neil Record's authoritative report for the IEA). They should be placed on the balance sheet immediately.

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