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 - 12:39 | 2972780 orangedrinkandchips
orangedrinkandchips's picture

like...no duh

 

(all due respect for author(s))

Mon, 11/12/2012 - 12:39 | 2972781 falak pema
falak pema's picture

lol, this trillionisation of first world debt makes this look like chicken feed :

£48bn gap in next government spending review, says study | Politics | guardian.co.uk

Mon, 11/12/2012 - 12:48 | 2972826 Orly
Orly's picture

Seems the USDJPY pair is trying to decouple from the risk trade.  It could get interesting...

Mon, 11/12/2012 - 13:47 | 2973026 falak pema
falak pema's picture

is there any correlation in real time via 4x plays between the way EURUSD evolves and the pairs that u follow : USDJPY and USDAUD amongst all the others?

I am assuming that 4x players are a breed apart, who specialise their capital market day trades to this segment only. I may be wrong on that assumption. 

Here is an example of what I mean : Mexican Peso Short Positions Rise - Business Insider

Mon, 11/12/2012 - 13:05 | 2972960 Acet
Acet's picture

If you resize that graphic to 20x20, the unfunded liabilities look much smaller.

Mon, 11/12/2012 - 14:13 | 2973305 OneTinSoldier66
OneTinSoldier66's picture

Good idea, I like it! Works for me.

 

Just curious, got an electron microscope handy that I can borrow?

Mon, 11/12/2012 - 12:40 | 2972785 booboo
booboo's picture

ol av a cup o tea and some Spotted Dick. The missus? Weil, she gets to watch.

Mon, 11/12/2012 - 12:40 | 2972787 EmmittFitzhume
EmmittFitzhume's picture

I've wondered how the NY Yankees can pay so much out in costs each year. Similar model as this. Finance it out to oblivion and pray to god it never catches up to you.  This type of shit is deeply embedded in so many institutions it's simply a joke now

Mon, 11/12/2012 - 12:40 | 2972789 otto skorzeny
otto skorzeny's picture

isn't GB basically just a huge welfare nanny state that masquerades as a country

Mon, 11/12/2012 - 12:42 | 2972796 SheepDog-One
SheepDog-One's picture

And the 'U.S.' is any different how?

Mon, 11/12/2012 - 12:48 | 2972831 mckee
mckee's picture

We don't know what "spotted dick" means?

Mon, 11/12/2012 - 13:06 | 2972967 Acet
Acet's picture

I myself thought that "spotted dick" had something to do with John Holmes until I moved to London ...

Mon, 11/12/2012 - 12:49 | 2972836 booboo
booboo's picture

We have Brwando the Thirst Mutilator, it's what the planet craves.

Mon, 11/12/2012 - 12:50 | 2972843 otto skorzeny
otto skorzeny's picture

I thought the article was about the UK?

Mon, 11/12/2012 - 12:59 | 2972906 LawsofPhysics
LawsofPhysics's picture

In a world where fraud is the status quo, you might want to consider the natural resources of each nanny state and who really has possession of those resources.  That and who can defend those resources.  The game remains about power and control, period.

Mon, 11/12/2012 - 13:41 | 2973175 kito
kito's picture

sheepdog, the u.s. is going to be energy independent shortly!! lots of jobs for everyone!! growth will return!!! cnbc said so!!!!

sheepie lets sing together:

 

 

My country where everythings for free....

sweet department of homeland security....obamas the king......

land where the constitution died......

land of the bankers pride......

from every citizens bent-over backside, let corporatocracy ring..........

 

Mon, 11/12/2012 - 12:43 | 2972805 ZeroPoint
ZeroPoint's picture

Jolly Good. I guess the Royal Family can always rely on its poppy fields in Afghanistan.

Mon, 11/12/2012 - 12:47 | 2972825 francis_sawyer
francis_sawyer's picture

Something attractive to the eye... & soothing to the smell...

~~~

http://www.youtube.com/watch?v=RG2keYgBiZc

Mon, 11/12/2012 - 12:53 | 2972863 otto skorzeny
otto skorzeny's picture

no way they're going to muscle in on the CIA's cash cow. I love that the US is now facing a huge heroin epidemic(at least here in the Chi burbs) and the MSM/ podunk cops/DAs can't figure out why.

Mon, 11/12/2012 - 13:00 | 2972924 Orly
Orly's picture

Another Chi-town conspiracy?  Sounds like it's turning into Way North Dallas...

Mon, 11/12/2012 - 13:05 | 2972955 francis_sawyer
francis_sawyer's picture

My favorite stories are the MENA airport operations & the CLINTON BODY COUNT...

~~~

http://www.theforbiddenknowledge.com/hardtruth/clintonbodycount.htm

http://www.apfn.org/apfn/snowjob1.htm

Mon, 11/12/2012 - 13:22 | 2973065 pods
pods's picture

God bless Gary Webb, the only man with balls enough to shoot himself in the head, twice.

pods

Mon, 11/12/2012 - 14:13 | 2973304 francis_sawyer
francis_sawyer's picture

That's hard to do... Especially if you're a lefty...

Mon, 11/12/2012 - 14:42 | 2973420 ZeroPoint
ZeroPoint's picture

CIA has the cocaine market. The royals have a large stake in opium.

 

 

Mon, 11/12/2012 - 12:44 | 2972808 pods
pods's picture

The whole world is circling the toilet.  Sooner or later a critical mass will wake up and realize it.

Let's hope that they figure out that it is the system that did it, instead of some idiot puppet politician.

pods

Mon, 11/12/2012 - 12:47 | 2972822 Wakanda
Wakanda's picture

Yo UK!  We tried to throw those bastards out a couple of hundred years ago (with mixed results).

Let's get together and do it right this time - time to clean house, top to bottom, inside and out.

The Second American Revolution, getting rolling in a neighborhood near you.

Mon, 11/12/2012 - 12:48 | 2972832 orangegeek
orangegeek's picture

And when these markets top and turn, there's going to be even less for these pensions to dole out.

 

http://bullandbearmash.com/chart/nasdaq100-weekly-closes-channel-support...

 

Have a niiiiiiiice day.

Mon, 11/12/2012 - 12:57 | 2972892 otto skorzeny
otto skorzeny's picture

can't they rely on big returns from USTs? i love the 8% return projections that all of the state/local govt union pensions expect to get on their investments-on what- their meth lab profits?

Mon, 11/12/2012 - 12:54 | 2972835 JustObserving
JustObserving's picture

Relax, Brits.  Kotlikoff has US unfunded liabilities at 1432% of GDP.  You have decades to go before you challenge the US, if ever.

http://www.bloomberg.com/news/2012-08-08/blink-u-s-debt-just-grew-by-11-...

Mon, 11/12/2012 - 13:32 | 2972849 NorthPole
NorthPole's picture

Talk of 5 trillions of 'unfunded liabilities' is bullshit because there is no formula that one can apply to compute how much your pension is going to be. Your future pension does not really depend on your current contributions; it is going to depend on how much money is available in the common coffer by the time you retire (and nobody knows how much is that going to be, so yes, it can very well turn out that you'll have to plant your own carrots if you don't want to starve to death).

It's a pay-as-you-go Ponzi, remember? Essentially, the deal is as follows: now, you agree to give away a certain percentage of your monthly income in return for a promise that sometime in the future (it is 65 years now but that can be raised any day) you'll get a monthly pension of an unspecified amount. 

Mon, 11/12/2012 - 13:48 | 2973211 Diplodicus Rex
Diplodicus Rex's picture

"Talk of 5 trillions of 'unfunded liabilities' is bullshit because there is no formula that one can apply to compute how much your pension is going to be."

What planet are you on? In the UK, the pension of a state employee is very easy to calculate and forecast.  The pension amount is a ratio of their years of service divided by 40 times their final salary. From there onwards it is increased in line with the CPI. What's not forecastable about that?

 However, where I do agree is that they have been made a promise which can't mathematically be kept. The fact that its not mathematically possible however, does not deter them from marching on the streets for more. They will indeed be planting carrots, they just don't know it yet.

"it is going to depend on how much money is available in the common coffer by the time you retire"

Yes and no. In the first instance, when there was not enough money in the coffers they borrowed the difference. This has been hapenning since 2001 in the UK. Eventually of course, this must come to an end and those promises will be broken. However, for the masses on state handouts, they will never know this is coming until the day they don't receive their first cheque.

Mon, 11/12/2012 - 13:59 | 2973250 NorthPole
NorthPole's picture

While there may be formulas, the very fact that - as you observed - it is mathematically impossible to deliver means that the formulas have to change, so it is as if they did not exist.

And that's my point. There is no '5 trillion of unfunded liabilities'.  There are no liabilities. When SHTF, they will simply raise retirement age and lower your pension down to the carrot level.

Mon, 11/12/2012 - 14:01 | 2973259 Diplodicus Rex
Diplodicus Rex's picture

I concur.

Mon, 11/12/2012 - 16:49 | 2973859 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

67 years and a permanet reduction to a lower rate if you want to get any earlier like many do/did at the age of 62. those born 1959 will pay more in than those before.. ponzi is as ponzi does

Mon, 11/12/2012 - 12:51 | 2972851 kikk
kikk's picture

I just recieved a letter from HM Government telling me my pension age is going up anyway. I think they hope I'll die before they have to pay. And even if I don't, I just know the BoE will print enough to pay me.

 

Mon, 11/12/2012 - 12:52 | 2972854 Silversinner
Silversinner's picture

To make things worse,most of the private pension funds

are loaded with gouvernment bonds(I.O.U).

Why people take private pension funds?

I use to think it was to be less dependant on the

state,so it makes perfect sense then to buy state

debt obligations<sarc>

 

Mon, 11/12/2012 - 12:52 | 2972858 Dempster
Dempster's picture

They've already pushed my pension date back to 66.

Now Zero Hedge push it back another 14 (I've decided to throw off the mortal coil at or before 80)

Which rather suggests I'm going to work till I die.

I suppose if I get lucky the arthritis in my knees may cause an impromptu fall from a scaffold, and put me out of my misery.

I’m piss-malling sick of reading these articles, they're bloody depressing.

Mon, 11/12/2012 - 12:59 | 2972904 otto skorzeny
otto skorzeny's picture

more good news for you - the off-putting of retirements only means that there are less jobs for the exciteable young-uns.

Mon, 11/12/2012 - 12:54 | 2972867 semperfi
semperfi's picture

Producers need to step aside, go on holiday for a few months, become takers for awhile, demand more freebies from Govt for awhile, in order to speed up the implosion.  If you can't beat em, join em.

Mon, 11/12/2012 - 12:56 | 2972877 Acet
Acet's picture

Not to worry, there's a plan to solve this!

First, they'll index any inflation indexed pensions to a well-known, independent and unbiased interest rate such as the Pound LIBOR.

Then Merving King will accelerate the printers to maximum speed.

In a couple of years those £5 trillion will be fully covered!

Mon, 11/12/2012 - 12:56 | 2972884 King Solomon's mine
King Solomon&#039;s mine's picture

Scary but hardly news. Hence open-door immigration policies, which change the ratio of working age population to pensioners, plus immigrant familes tend to have higher birth rates which will increase the working population in the future. Now all that is needed is an economy which can employ them. Otherwise let's hope for a few cold winters. Climate change, anyone?

Mon, 11/12/2012 - 13:03 | 2972947 ShrNfr
ShrNfr's picture

Bunch of small time guys. The total unfunded obligations of the US federal government is $220 trillion according to the CBO. That is 1,300%+ of the GNP. Good luck with that kids.

Mon, 11/12/2012 - 13:25 | 2973083 pods
pods's picture

And they probably use the government propped up GDP number for the calculation too.

pods

Mon, 11/12/2012 - 13:04 | 2972952 three chord sloth
three chord sloth's picture

The promises made during Spring and Summer, which seemed so easily afforded during times of real growth, are defaulted upon during the Winter. As they must be for Spring to come again. It is the nature of the long cycle.

Mon, 11/12/2012 - 13:08 | 2972984 zilverreiger
zilverreiger's picture

so the unfunded part still has to be filled over the coming years? how much will they be short in the end, that's what counts

Mon, 11/12/2012 - 13:10 | 2972998 kito
kito's picture

wow, and i thought their warm beer, ugly women, horrible accent, tasteless mushy food and crappy weather was bad enough............

Mon, 11/12/2012 - 13:14 | 2973027 Tinky
Tinky's picture

Good racehorses, cheese and apples, to be fair.

Mon, 11/12/2012 - 13:25 | 2973079 JustObserving
JustObserving's picture

And you get arrested for a photo of a burning poppy on facebook:

Man Arrested For 'Posting Image Of Burning Poppy On Facebook'

http://www.huffingtonpost.co.uk/2012/11/12/man-burning-poppy-arrest_n_21...

 

Mon, 11/12/2012 - 13:31 | 2973113 pods
pods's picture

The UK is light years ahead of the rest of the world in the great Police State race.  

They have camera's taping every single aspect of your life over there.  
The only things they miss are when the cops happen to execute brown people or when there happens to be a coincidental tube bombing/security exercise.

But to burn a paper flower?  WTF?

In-fucking-credible!

pods 

Mon, 11/12/2012 - 15:08 | 2973519 Overfed
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