The number hiding in plain sight
The UK's national debt gets talked about constantly. Every budget, every fiscal statement, every opposition attack line. The number you hear — somewhere around £2.7 trillion — is treated as the definitive measure of the state's financial obligations.
It isn't. It excludes £1.4 trillion of future pension promises made to public sector workers.
That figure — confirmed by the OBR in its July 2025 fiscal risks report — represents the unfunded liabilities of the NHS, teachers', civil service, armed forces, police, and firefighters' pension schemes. Guaranteed, inflation-linked income for life. No fund. No invested pot. No assets set aside. Current pensions are paid from today's taxes. Future pensions will be paid from future taxes — by people who have no say in the matter and were never asked.
Why isn't this in the headline debt figure? Accounting convention. Unfunded pension liabilities appear on the balance sheet under "Public Sector Net Worth" — excluded from "Public Sector Net Debt," the figure in every budget. The OBR notes that if accruals accounting were applied, borrowing would have been on average 1.6% of GDP higher every year for the past decade.
What a public sector pension is actually worth
Public sector defined benefit schemes accrue at 1/57th of average salary per year. A 30-year career on £40,000 produces a pension of £21,053 per year — guaranteed, inflation-linked, for life, from the day you retire until the day you die.
To understand what that's worth, ask what a private sector worker would need to buy the same income as a standard inflation-linked annuity at 65. Current rates: approximately £4,800 of annual income per £100,000 of pot.
The funded exception
The Local Government Pension Scheme is 120% funded — meaning assets exceed liabilities by an estimated £85 billion surplus. This is the scheme Reform UK proposed closing to new entrants first. The LGPS is the one scheme that works as it should. The unfunded NHS, teachers', civil service and armed forces schemes are the fiscal risk. Those are the ones with no money behind them.
The private sector comparison
Defined benefit pensions in the private sector have been almost entirely eliminated. Fewer than 1% of private sector workers are accruing DB pension benefits today. The shift to defined contribution — where the employer's obligation ends at the contribution stage and the worker bears all investment risk — is near-total.
The result is a two-tier retirement system. The gap is not between the rich and the poor. It is between those who work for the state and those who don't. It is structural, silent, and growing every year that politicians choose not to discuss it.
This is not an argument that public sector workers don't deserve good pensions. Many are not well paid. Many do essential work. It is an argument that the scale of the commitment is not understood by the public who foot the bill — and that the accounting is designed, whether by accident or otherwise, to keep it that way.
Enter a public sector role's details to see their guaranteed pension — and the private pot a market worker would need to buy the same income with an inflation-linked annuity.
Funded by future taxpayers
inflation-linked annuity at
What would reform actually require
Closing schemes to new entrants only slows future accrual. It does nothing about the existing £1.4 trillion in promises already made. Those will be honoured. The question is not whether, but who pays — and whether future generations understand what they are inheriting.
The Policy Exchange estimates that moving new public sector workers to defined contribution schemes could generate annual savings of £6.1 billion after 20 years, rising to £37.4 billion after 50 years. The OBR projects that pension costs will fall from 1.9% of GDP today to 1.4% by 2073/74 — if growth assumptions hold. These are projections, not guarantees. A decade of underperformance would unravel them.
The bottom line: A £1.4 trillion obligation that doesn't appear in the headline debt figure, backed by no assets, dependent on future growth assumptions, owed to millions of people who earned it. That is not a scandal. The silence around it — across parliament, media, and budget after budget — probably is.
Methodology & Sources
Unfunded liability (£1.4tn): OBR, Fiscal Risks and Sustainability, July 2025. Central government unfunded statutory DB schemes, end of 2024-25.
Total liability including LGPS (~£2.6–3tn): HM Treasury, Whole of Government Accounts 2021-22; Parliamentary Question 15278, November 2024.
LGPS funding (120%): LGPS Scheme Advisory Board; Pensions Age, 2024. Estimated ~£85bn surplus.
Accrual formula (1/57th): Career Average Revalued Earnings scheme, Public Service Pensions Act 2013. Police/fire use 1/55.3th; armed forces 1/47th.
Annuity rates: Which? Money Helper calculator, 1 April 2026; Hargreaves Lansdown data, February 2026. Inflation-linked (CPI), single-life. Calculator uses £4,800/£100k at 65 as central estimate; £3,900 at 60, £3,200 at 55, £6,200 at 70.
Average private DC pot (~£107,000): HMRC pension statistics. Median is substantially lower.
Per-household cost (£276): OBR net unfunded pension spending 2023-24 (£7.9bn) ÷ ~28.6m UK households.
Policy Exchange savings: "Public Sector Pension Reform," February 2026, 2025 prices.
GBTT has no political affiliation. Figures drawn from official sources. Readers should form their own conclusions.