FOI reference: FOI-2024-2383
You asked
With reference to sections B23 and B24 of this OBR document Economic and fiscal outlook -- October 2024 - Office for Budget Responsibility, and other parts which refer to pensions, please can you provide a breakdown and source for the pensions numbers in PSNFL, namely:
- What pension schemes are included in the £507bn liabilities as at 31/3/24?
- A breakdown of the £507bn between the different schemes
- Confirmation that the same pension schemes are included on the assets side
- Confirmation of the assets numbers included in total assets in respect of funded pensions, as at 31/3/24
- A breakdown of the assets numbers
- Any other relevant information which will help with a clearer understanding of the current PSNFL position, including any adjustments for current market conditions
Please can you also consider the following related questions:
- Are LGPS pension scheme assets and liabilities only included to the extent that the are in respect of public sector employers (in line with Whole of Government accounts)?
- Are pension scheme liabilities valued on an IFRS basis (in line with Whole of Government accounts)?
- Are all pensions scheme assets included, in which case how are non equity assets classified and presented?
We said
Thank you for your enquiry.
The ONS estimates of funded pension obligations included in the public sector finance (PSF) statistics comprise estimates for funded defined benefit (DB) pension schemes classified as being under public sector control by the Economic Statistics Classifications Committee. The following DB schemes are presently included in our estimates of both public sector's financial assets and liabilities:
Audit Commission Pension Scheme
Bank of England Pension Scheme
BBC Pension Scheme
Bradford and Bingley Pension Scheme
British Coal Staff Superannuation Scheme
Local Government Pension Scheme (LGPS)
Transport for London Pension Scheme
National Museum Wales Pension Scheme
National Library Wales Pension Scheme
Mineworkers' Pension Scheme
Northern Rock Asset Management Pension Scheme
Relevant sections of the Railways Pension Scheme (RPS)
In addition, the National Employment Savings Trust (NEST), a defined contribution (DC) scheme, and the Pension Protection Fund and, are also included in the estimates.
We hold the estimates of asset and liability values for each of these schemes. However, although some of these pension schemes publish the actuarial valuation of their liabilities and a detailed breakdown of their asset holdings on a regular basis, others do not. As explained in our article titled Pensions in the national accounts: UK Table 29 methodology, where no administrative data are available for any given year, we estimate the actuarial value of liabilities and use supplementary sources, including survey data, to compile information on their asset holdings. Consequently, the scheme-level data are exempt from disclosure as they would allow individual enterprises to be identified. Section 39 of the Statistics and Registration Service Act 2007 (SRSA) renders it a criminal offence for ONS to disclose information held by for statistical purposes that would identify an individual or a body corporate. As we are prohibited by law from publishing statistics in which individual businesses can be identified, Section 44(1) of the Freedom of Information Act 2000 (FOIA) applies.
The statistical estimates of the actuarial liabilities differ from those available from the accounting sources. The principal difference concerns the discount rate applied in statistics. The framework underpinning the compilation of national accounts and PSF statistics in UK, the European System of Accounts 2010 (ESA 2010), through the associated Technical Compilation Guide for Pension Data in National Accounts, prescribes the use of a single discount rate for government-managed DB pension schemes. In practice, this means that a nominal rate of 5% (3% real) was used for the pension estimates up to the financial year (FY) ending March 2018, and a nominal rate of 4% (2% real) has been used since.
There are further differences in the methodology between the fiscal statistics, including the public sector net financial liabilities (PSNFL) aggregate, and the accounting estimates based on the International Financial Reporting Standards (IFRS). As such, the entire liability of the LGPS is included in our estimates, whereas the RPS is only included to the extent that the UK government is deemed to be the manager for the respective sections of the scheme.
Finally, please note that all types of financial assets recognised under the ESA 2010 framework are included in the ONS estimates. However, by its definition, the PSNFL aggregate does not reflect the stock of nonfinancial assets such as land and buildings. The direct holdings of these assets are excluded from this measure, just as they are for all other types of public bodies.
For more information on the methodology for the recording of pensions in the PSF statistics, please refer to our article titled Pensions in the public sector finances: a methodological guide.