Recent actuarial calculations have shown that £50bn extra will be required to fund public sector pension payments in future years and the British Chambers of Commerce says it is not right for this to come out of taxpayer's pockets.

Bill Midgley, President of the British Chambers of Commerce (BCC), said: “At £440bn, the cost of public sector pension liabilities already equates to the size of the UK’s national debt and places a huge weight on the shoulders of future taxpayers."

"An extra £50bn renders future tax increases to pay for this enormous liability even more likely for both businesses and their employees."

Taxpayer’s money is not a bottomless pit

Urgent action is needed to remedy this situation, says the BCC report. Taxpayer’s money is not a bottomless pit and public sector employees must take more responsibility for providing towards their retirement.

Indeed, the Government is urging workers in the private sector to do just that, argues Midgley, saying that employee pension contributions – which in some local authority schemes have not increased for many years – should rise to more accurately reflect levels of under-funding. Midgley says non-contributory schemes should be scaled back and replaced, to some extent, by employee contributions.

Mr Midgley continued: “We need to see a culture shift in public sector pension provision. Serious consideration must now be given to replacing extremely generous and unfunded final salary pensions with alternative, and less expensive, arrangements."

"This has happened in the private sector in recent years, where the increasing costs associated with Defined Benefit schemes have forced many firms to reassess their pension provision.”