Public sector unions are to call for more pay rises despite taxpayer-funded pensions rising by over a third in just 10 years, new analysis shows.
Unions will debate a motion seeking increased pay next month after a decade of real-term salary cuts, which is expected to pass.
However, millions of public sector workers have had their pensions jump by 35pc since 2014, figures from wealth manager Evelyn Partners show, while the yearly amount being paid to those who have already retired has risen by more than £17bn.
The plans, set to be debated and voted on at the Trades Union Congress conference ahead of the October Budget, could also put unions on a collision course with the Government, prompting Chancellor Rachel Reeves to warn there were “no blank cheques.”
One motion laid by the Public and Commercial Services Union (PCS), which represents civil servants, calls for unions to campaign on pay restoration for all public sector workers after it said civil service salary levels had fallen by 1.5pc a year on average since 2011. The motion will also demand that Rachel Reeves imposes a wealth tax on the richest 1pc “to give public sector workers a 10pc pay rise”.
The cost of public sector pensions – which offer a guaranteed income for life and are enjoyed by 82pc of staff – reached £32.2bn in the 2013 to 2014 tax year, according to official figures. This hit £49.6bn in 2023 to 2024 and is predicted to rise to £54.3bn in 2024 to 2025.
Taxpayers will also foot a £3.6bn bill as contributions from employers and staff do not cover the amount being paid out to retirees during 2024 to 2025.
Jason Hollands, of Evelyn Partners, said: “There is no doubt that the cost of gold-plated public sector pensions has sky-rocketed, with public sector pension liabilities estimated to be almost twice the size of the national debt.
“This is a burden ultimately borne by all taxpayers, current and future, most of whom will be in far less generous defined contribution schemes where the outcomes are uncertain.
“It’s a topic that politicians seem reluctant to discuss, despite both doubts about how sustainable this is and the gaping divide in the UK between the public and private sectors.”
Fran Heathcote, PCS general secretary, said: “We believe this is an important debate because workers have suffered a catastrophic fall in living standards over decades, while executive pay rocketed.
“Boosting the wages of people on low and middle incomes boosts economic demand as people spend their income in local economies. Boosting the wages of those at the top, like FTSE 100 chief executives, whose pay went up by 19pc last year, just means they save more and often put it offshore.”
However, John Ralfe, pensions consultant, warned that salaries were not the only cost when awarding pay rises.
He said: “If you’re calculating pay, you must take pensions into account and the taxpayers are paying something like 25pc of salary for teachers, the NHS and civil servants – much, much more than even the most generous private sector pensions.”
Britain’s public sector pensions bill already exceeds the size of the economy, with some experts putting the true figure at almost £5 trillion.
If the PCS motion passes, it would also heap pressure on the Government, which has already awarded a slew of bumper pay rises to ward off further strike action.
Chancellor Rachel Reeves has signed off on pay rises of up to 5.5pc for millions of public sector workers and 22pc for junior doctors in a bid to ward off further strikes.
The Government also oversaw an inflation-busting 15pc pay rise offer to train drivers after a series of walkouts crippled the nation’s rail network.
Restoring public sector pay to the same levels as 2011 in real terms is forecast to cost the economy more than £50bn.
When interviewed on August 22 during a visit to Liverpool, Chancellor Rachel Reeves said: “Some public sector unions have been pressing for pay restoration that would award above-inflation deals to public sector workers to make up for a decade of cuts.
“Keir Starmer and I decide our policy, not the trade unions. There are no blank cheques.”
The Treasury declined to comment further.
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