UK public sector pensions are being used to beat the electorate’s austerity expectations into line ahead of next Tuesday’s emergency budget by the new Con-Lib coalition Government.

The newly formed Office for Budget Responsibility (OBR) this week announced the likely cost of funding public sector pensions to more than double in five years from £4bn to £9bn.

A double whammy of attractive final salary pensions and a demographic shift that is seeing millions of baby boomers moving into retirement (many of whom will live longer as longevity increases) is creating an issue that many developed nations are well aware.

Yet the new Government plans to change this with Deputy Prime Minister, Nick Clegg criticising what he calls “unreformed gold plated” public sector pensions.

Unfortunately for Britain, this additional funding cost – albeit a small slice of the current national debt level – comes at a time when the new Government is seeking significant cost savings in a bid to reign in the national debt and reduce its huge future interest bills.

It has been estimated that the interest being paid by the UK on its debt outstrips what the government collectively spends on education and health.

More details of the OBR review are expected to be revealed in the Emergency Budget on June 22nd, along with additional plans to reduce the deficit, estimated at £155bn this year.

Deputy PM Clegg spoke this week of the inequity in the system, which seems to pave the way for significant reform of public sector pensions, which has been previously hinted at by the government.

“Private sector workers have already seen final salary schemes close, while returns from defined contribution schemes fall,” Clegg said in an interview.

“So can we really ask them to keep paying their taxes into unreformed gold-plated public sector pension pots? It’s not just unfair; it’s not affordable.”

However some argue that making Government employees contribute more to their pension is not necessary as many schemes have moved to defined contribution and away from defined benefit for new entrants.

Nonetheless, Clegg and co need something that doesn’t grate too heavily for the vast majority of the population in the early stages of its austerity measures.

Slashing and burning in sensitive areas will trigger national strikes and reduce productivity even more, and just at a time when it needs every single £ it can get into its tax coffers.