• Steve H. Hanke
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    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

The UK's Most Disturbing Number: Total Unfunded Pension Obligations = 321% Of GDP

Tyler Durden's picture


For all our UK readers, who hope some day to collect pension benefits, we have two messages: i) our condolences, and ii) you won't.   Why? The answer comes straight from the ONS:

The new supplementary table published by ONS in Levy (2012)10 includes the following headline figures for Government pension obligations as at end December 2010:

  • Social security pension schemes (i.e. unfunded state pension scheme obligations): £3.843 trillion, being 263 per cent of gross domestic product (GDP) (£3.497 trillion at end of December 2009)
  • Centrally – administered unfunded pension schemes for public sector employees (i.e. unfunded public service pension scheme obligations): £852 billion, being 58 per cent of GDP (£915 billion at end of December 2009)
  • Funded DB pension schemes for which government is responsible: £313 billion, being 21 per cent of GDP (£332 billion at end of December 2009).

In summary, the estimates in the new supplementary table indicate a total Government pension obligation, at the end of December 2010, of £5.01 trillion, or 342 per cent of GDP, of which around £4.7 trillion relates to unfunded obligations.

Or visually:

Of course, US-based readers should not get their hopes up too much either. With total underfunded liabilities - including SSN and healthcare, in the US well over $100 trillion (on under $16 trillion of GDP) it is only a matter of time before the entire welfare state ponzi scheme blows up.

Source: ONS

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Mon, 11/12/2012 - 12:32 | 2972750 vast-dom
vast-dom's picture


Mon, 11/12/2012 - 12:46 | 2972816 Richard Chesler
Richard Chesler's picture

Ponzion Schemes


Mon, 11/12/2012 - 13:11 | 2973003 TruthInSunshine
TruthInSunshine's picture

The Krugman solution = debase the pound sterling by 642% thusly.

Mon, 11/12/2012 - 13:15 | 2973029 JPM Hater001
JPM Hater001's picture

Could someone pass the popcorn?

Mon, 11/12/2012 - 13:25 | 2973082 old naughty
old naughty's picture

Watch LIQUID-ity flow thru strait and ocean...

Mon, 11/12/2012 - 13:43 | 2973187 redpill
redpill's picture

Eventually it will occur to someone that there is a conflict of interest when you have government trying to run a national health service AND keep pensions solvent.

Mon, 11/12/2012 - 14:10 | 2973289 francis_sawyer
francis_sawyer's picture

Wow!... I could have had a V-8...

Mon, 11/12/2012 - 14:14 | 2973310 Harlequin001
Harlequin001's picture

I don't see what everybody's worried about, it'll soon be no more than the price of a dozen eggs, ok half a dozen eggs, ok one egg...

er, plastic bag anybody?

Mon, 11/12/2012 - 15:17 | 2973567 economics9698
economics9698's picture

WTF are they bitching about?  321% is pretty good.

Mon, 11/12/2012 - 20:49 | 2974610 BigJim
BigJim's picture

Someone help me out here.

We're comparing stocks and flow here, aren't we? The pension liability is a total spread out over many years, whereas GDP is an annual measurement of economic activity... so surely it's not as bad as it looks.

Or am I missing something?


Mon, 11/12/2012 - 16:19 | 2973780 lasvegaspersona
lasvegaspersona's picture


do not forget the other conflict: suck as much off the top as possible to return to donors while pretending to care about those other past due items

Mon, 11/12/2012 - 22:24 | 2974880 Pseudolus
Pseudolus's picture

They've been preparing this for years. Look up the IMF's recent pubs on longevity risk

In the UK's case, 

First they will test you and take you into their care 

(Don't resist - aggression and or conspiracy thinking is a sign of dementia don't you know)

Next they can take the meagre post-tax savings you worked your life for to pay off Government debts 
"Elderly people face losing their wealth"


after they have already eroded your currencies purchasing power

then they can cut down the pensions bill by putting you on their "dignified" Care pathway


(yes, think Death Panels)

then reclaim the equity in your estate for the cost of your care
....and give your house to the Bankers to remortgage to the next generation of fools in the chain
No links for the last one - its my contention 

Mon, 11/12/2012 - 15:15 | 2973546 Don Diego
Don Diego's picture

The UK Labor party solution = import 10 million paki/somali/jamaicans to increase the taxpayer base.

Tue, 11/13/2012 - 03:17 | 2975373 Kobe Beef
Kobe Beef's picture

I believe they are increasing the welfare parasite base, but good Public Relations demands we call them "taxpayers."

Mon, 11/12/2012 - 13:02 | 2972940 kaiten
kaiten's picture

What´s our national debt? One ponzillion.

Mon, 11/12/2012 - 14:08 | 2973285 SheepDog-One
SheepDog-One's picture

No worries....next article states 'Investors optimistic of fiscal claff resolution'! HOORAY!

Mon, 11/12/2012 - 14:33 | 2973378 HD
HD's picture

+1 for accuracy.

Mon, 11/12/2012 - 13:10 | 2972996 jimijon
jimijon's picture

Exactly! So help me nominate him!


Mon, 11/12/2012 - 18:37 | 2974246 AvoidingTaxation
AvoidingTaxation's picture

Done. Genio Italico!

Mon, 11/12/2012 - 13:36 | 2973141 jal
jal's picture

With an increase of the death rate the problem will not get that big.

Mon, 11/12/2012 - 12:34 | 2972761 buzzsaw99
buzzsaw99's picture

sucks to be them, er, us, er...

Mon, 11/12/2012 - 12:42 | 2972800 francis_sawyer
francis_sawyer's picture

In this sweet ol country

Where I come from

Nobody ever works

& nothing gets done... WE HANG FIRE



Mon, 11/12/2012 - 13:28 | 2973103 Diplodicus Rex
Diplodicus Rex's picture

"This video contains content from UMG. It is not available in your country."

On a UK thread as well..........
Mon, 11/12/2012 - 12:35 | 2972766 Dr. Engali
Dr. Engali's picture

The pound sterling is about to become once tungsten.

Mon, 11/12/2012 - 12:47 | 2972823 Stock Tips Inve...
Stock Tips Investment's picture

These numbers are very important. Very simply, we plot the size of the problem of these countries like UK. As they let it come to this situation?. It's amazing, but no matter how this all started. What matters now are the consequences of these irresponsible and solutions that should be implemented. Unfortunately, any of these solutions originate a drastic drop in the quality of life of people used to live very well. Many poor people in rich countries. Internal problems? ... external problems?. Might be worth reading some history books.

Mon, 11/12/2012 - 12:48 | 2972834 Winston Churchill
Winston Churchill's picture


They are pretty straight up figures under GAAP.

Look at Uncle Sam's under the same conventions, and its at leat twice as

bad with optimistic projactions.Worst case ,five times.

Nobody is getting paid anywhere, except with coloured TP.

Mon, 11/12/2012 - 13:05 | 2972959 Dr. Engali
Dr. Engali's picture

Believe me I know we are screwed. Try convincing the reds or the blue. They still believe it can be saved.

Mon, 11/12/2012 - 14:55 | 2973470 NoDebt
NoDebt's picture

Agreed.  This thing "jumped the shark" more than a few years ago.

I recall my father telling me about how SS was a "ponzi scheme" back in the 80s, what that meant and how it was likely to turn out (badly).  Now he's old enough that he is collecting SS himself.  I reminded him of that 25 year old conversation recently.  He claims to have no recollection of it.  Surprised?

Tue, 11/13/2012 - 03:22 | 2975377 Kobe Beef
Kobe Beef's picture

Not at all. Fucking boomers. Never think about the consequences.

"Me, me, me, now, now, now."

-The Baby Boomers


Mon, 11/12/2012 - 16:24 | 2973790 philosophers bone
philosophers bone's picture

GAAP is a joke.

Mon, 11/12/2012 - 13:16 | 2973033 JPM Hater001
JPM Hater001's picture

Well, they do have gold...albeit Germany's.

Mon, 11/12/2012 - 16:17 | 2973769 viahj
viahj's picture

well, it's mostly gold

Mon, 11/12/2012 - 12:36 | 2972769 Oxygen
Oxygen's picture

Should ask Ben to print some more

Mon, 11/12/2012 - 12:36 | 2972772 EscapeKey
EscapeKey's picture

that's ok, there's probably some private sector pension funds they can raid... again.

thanks, gordon brown, for your 1997 private sector pension raid.

Mon, 11/12/2012 - 12:51 | 2972848 Stock Tips Inve...
Stock Tips Investment's picture

The problem is not the private pension funds. These funds are safe. These figures refer to the pensions which are in charge of the government. As always, the government collects less resources than commit to spend. Irresponsible governments irresponsible thousand times.

Mon, 11/12/2012 - 12:56 | 2972880 LawsofPhysics
LawsofPhysics's picture

Unfortunately those private copmpanies are relying on the government as their only customer.  PONZI fucking planet, let it die, and let's find out the real value of everyone's labor on BOTH sides of that equation.  Fucking bring it.

Mon, 11/12/2012 - 13:01 | 2972917 semperfi
semperfi's picture

GOP should step aside and let The Kenyan Thug and his Senate Army have their 100% way on fixing the "Fiscal Cliff".   100%

Mon, 11/12/2012 - 14:07 | 2973272 OneTinSoldier66
OneTinSoldier66's picture

I agree. John Boehner should hand the gavel back over to Nancy Pelosi.


It should be obvious to all by now that the solution is to have more bills written by lobbyists, that we need to first pass before we can find out, uhhh, what is in it.

Mon, 11/12/2012 - 13:03 | 2972920 Acet
Acet's picture

With ZIRP forever, those "safe" private pension funds will be returning to pensioners every month barelly enough money to cover their bread-buying needs.

Also given the local laws on pension funds (which make then not at all transparent, almost impossible to leave and allow for fee structures where you have to pay costs on every trade your Fund Manager does), most people have been finding out that the £X pounds they have been put in there for the last 20 year are now worth less that £X.

Self investment, preferably in physical Gold given the current race of competitive currency devaluation is at the moment the only way to have a pension in the future.

Mon, 11/12/2012 - 13:04 | 2972949 GottaBKiddn
GottaBKiddn's picture

Correction: They will be safe after the 50% devaluation of the Pound.

Mon, 11/12/2012 - 13:09 | 2972991 AbbeBrel
AbbeBrel's picture

Governments are good at promising, and then struggle to deliver anything of value.   Give them NO QUARTER!!  OK OK I will settle for a nickel  - it is better than nothing!   Could be worse - the post office could be managing your money, like in Japan.

Mon, 11/12/2012 - 13:59 | 2973251 Diplodicus Rex
Diplodicus Rex's picture

"These funds are safe"

Haha, ha, he, ho , ha  LOL

Which funds do you think pension companies have on their balance sheet? Triple A MBSs. MBSs which are backed by the houses on which the mortgages have been written. Those have declined 30% from the peak in 2007 and default rates are soaring. Those instruments are still valued on the balance sheets of the pension companies at 2007 Mark To Unicorn rates. Those pension companies are already insolvent.the only reason that they are still in business is the relaxation of the FASB rules and the use of Mark to Fantasy.

I started in September of 2011 to repatriate funds from four pension companies. By Feb 2012 I had two of them. It took until the end of Oct 2012 to get the final two out of the pension companies. They had no cash with which to pay out so they ere forced to sell one of their assets. They can't sell any MBSs because everyone else knows they are toxic. A sale of any one for true value (pennies on the Pound, cents on the Dollar) would trigger a revaluation on all of their balance sheets which they want to avoid at all costs. So they are forced to sell an asset which still has true value which in turn immediately reduces the value of their holdings.

the next tsunami of which people rarely make mention is the wholseale declaration of insolvency by the pension companies. This will happen and there will be no private pensions. The first to withdraw will get theirs. Everyone else......not so much.

Mon, 11/12/2012 - 18:57 | 2974318 nofluer
nofluer's picture

"The problem is not the private pension funds. These funds are safe."

Tell it to the Argentinians!!! (Then DUCK!)

Mon, 11/12/2012 - 13:36 | 2973142 Diplodicus Rex
Diplodicus Rex's picture

Its a lot worse than that. In 1997 Labour campaigned on a manifesto promise to lower the unemployement rate which the Tories had let climb to circa 2.5m. Sure enough, they were voted in and over the next three years transferred 1m people from the dole queue to being employees of the state. Now when they were on Social Security, that's just about how much they got (probably with some tax reliefs thrown in). However, once a state employee they then needed 10m2 of office space with a computer and all the licensed software that goes with it. Desk & chair, their share of the electricity and heating bill for their part of the office. Car parking space and a share of the canteen. "Training courses" and holiday entitlement, Health & Safety, Personal Protection Equipment, a manager to tell them all what to do with their own share of all of the above. And finally, the cherry on top of the icin gon the cake is the unfunded, index-linked fat cat gold plated pension that no-one in the private sector can afford.   Gordon Brown should be hanged drawn and quartered for treason.

Mon, 11/12/2012 - 12:38 | 2972775 richard in norway
richard in norway's picture

no biggie, they dont all have to be paid on the same day, most of those folks will die before they get their pensions anyhow

Mon, 11/12/2012 - 12:42 | 2972795 Rainman
Rainman's picture

except for the Queen, who will obviously live forever

Mon, 11/12/2012 - 12:45 | 2972813 francis_sawyer
francis_sawyer's picture

Dynamite with a laser beam

Guaranteed to blow your mind... ANYTIME



Mon, 11/12/2012 - 13:09 | 2972870 THE DORK OF CORK
THE DORK OF CORK's picture

Thats no problem...........their obligations are in £sss yes ?

But how are they going to pay for imports ?

UK norwegian trade balance £ millions

Y2009 : - 13,368

Y2010 : - 17,937

Y2011 : - 21,791


The above is of course oil and gas.


balance of trade oil £ millions

Y2009 : -3,426

Y2010 : -4,719

Y2011 :-11,509


The closure of the railways in the 60s and the shutting down of their Nuclear energy industry will come to haunt them.


This is the legacy of petro heads that refused to pay labour and replaced this with massive oil burn so that they could eat the surplus............the surplus days are over yet the the rail network is now very small and most of the nuclear enginners are either dead or retired.



Mon, 11/12/2012 - 12:41 | 2972778 SheepDog-One
SheepDog-One's picture

Yea just wait till this headline appears informing the US pensioner theyre in the exact same boat! Isn't our 'unfunded liabilities' figure something like $600 trillion? Hey I know....lets tax the rich, that oughta fix it.

How can ya have any pudding when ya aint eat ya meat??

What meat, guv'nr??

Mon, 11/12/2012 - 12:42 | 2972801 Dr. Engali
Dr. Engali's picture

Eat your damn peas!

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