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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 - 13:27 | 2973092 semperfi
semperfi's picture

tasteless mushy food

so you've tried their SPOTTED DICK have you ?

Mon, 11/12/2012 - 13:48 | 2973208 kito
kito's picture

unless it was a secret ingredient in one of their numerous bland pot pies, i would say no.........

Mon, 11/12/2012 - 13:51 | 2973218 JustObserving
JustObserving's picture


If you are gay, you may relish that dish - nothing wrong with that.

Edith Cresson, Prime Minister of France, said that 25% of Englishmen are homosexual.

French women had this explanation:

"Too many years in all-male boarding schools," one Frenchwoman explained.

Unfortunately for British men, some Englishwomen agreed with Cresson:

"More disturbing to Englishmen is that some Englishwomen agree. "In an English street, you might as well have a paper bag over your head for all the notice any man takes of you," wrote Lesley Garner in The Daily Telegraph, adding that Mrs. Cresson had given a "hurtful, shocking and uncomfortably accurate view" of British men."


Mon, 11/12/2012 - 14:07 | 2973283 kito
kito's picture

so that explains the ugly british women, must be some type of evolutionary thing where the pretty genes are eventually phased out by natural selection due to the lack of attention by those blokes.........

Mon, 11/12/2012 - 23:45 | 2975051 Lore
Lore's picture

"so that explains the ugly british women"

It's the same everywhere. People in Western countries don't care about their appearance anymore.  Most can no longer afford to dress nicely.  Those who do stand out, are ostracized and become targets.  So it becomes normative.  Anything goes, and standards are lost.  The Wal-Martian is the trend-setter for the new century.


Mon, 11/12/2012 - 19:26 | 2974430 I Feel a little...
I Feel a little Qeasy's picture

Ha ha ha! An American talking about others' accents presumably in his own droning monotonous nasal whine, what a cunt!

You've obviously never actually met an American woman, at least that's a positive you fat tea-total xenophobic sun-burnt fuck-pig.

Mon, 11/12/2012 - 13:25 | 2973080 hooligan2009
hooligan2009's picture

great article..some facts on the table.

couple of points

1. the UK pays one of the lowest state pensions in the world.

2. germany, france, japan and the US are in a far worse position (err..that may not be a UK recommendation).

3. alternatives are to inflate, default or "extend and pretend" government debt. either way, state pensions will be pennies in the dollar/pound/euro. When (not if) this happens, elderly folk without private pensions will starve and die of disease. luckily the old will be to weak and frail to fight and there kids will all be addicted to i-pads.

4. expect taxes on 401 k's and other private pension plans to attract a 50% tax rate above the state pension.

Mon, 11/12/2012 - 13:26 | 2973090 MiniCooper
MiniCooper's picture

Hey Tyler. I live in the UK.

Thats my unfunded pension you are talking about. No worries though - a few of us have figured out we are not going to get a pension anyway. No pension - no liability.

It really is that simple. Only problem is that the politicians still have to work out how they are going to tell the other 90% that haven't yet worked it out and still lthink they will get a pension after paying years of National Insurance (social security contributions).

Mon, 11/12/2012 - 13:37 | 2973140 Bossuet
Bossuet's picture

Hello citoyens des USA, il vous suffit de patienter encore un peu, n'est-il pas ?


Pétrole  : Les Etats-Unis premier producteur vers 2020, selon l'AIE


Qu'en pensez-vous ?

Mon, 11/12/2012 - 13:44 | 2973192 Peter Pan
Peter Pan's picture

The huge divide between promises of government and the expectations of people on the one hand and the ability of the system to deliver on the other is so great that I am bewildered at the total BS spewed out by polticians and economists about the strength of all economies.

Up until now people have generally managed to keep mind and body together but it is clear that this luxury is fast running out.

Mon, 11/12/2012 - 13:45 | 2973196 ItsDanger
ItsDanger's picture

Unfunded pension liability.  Estimate how much of that is tied to ZIRP.  Unintended consequences?  You havent seen anything yet.  Its a snowball rolling the mountain turning into an avalanche.  This hardly gets discussed anywhere yet is a MAJOR problem.  Cut out the political crap on TV and put an actuary on for once.  Sad thing is that many of these plans STILL have unrealistic expected rates of return.  Why?  To cover up the problem and keep funding low.

Mon, 11/12/2012 - 13:48 | 2973205 SillySalesmanQu...
SillySalesmanQuestion's picture

Hmmmm...wonder how that happened...?

Mon, 11/12/2012 - 13:49 | 2973215 northerngirl
northerngirl's picture

Oh, I'm not worried this problem will be passed to the next generation just as all others.

Mon, 11/12/2012 - 14:45 | 2973425 reload
reload's picture

My 14 year old daughter came home from school (in the UK) a few months ago having been shown a chart like this by her ecconomics teacher who has a habit of going a bit `off script` - good for him.

The class discussion which followed concluded that there was no way their generation would feel remotely obliged to make good the governments unkeepable promises. So what do you think will happen? I asked -"they probably just print the money" ahe said. Will that work? I asked. "No" she said "The money will not be valuable" After a long pause she said "it might even be stupid saving money, is it better to have Gold?" This is not an area we had talked about previuously in any depth, she and her class were joining the dots for themselves.

So there is hope. This kid is also very good on a Horse, at the wheel of a tractor and gaining competance with a gun.

Do not assume the next generation will be so easily duped. They are not all nintendo addicted idiots, and some are being tought to think for themselves.

Mon, 11/12/2012 - 16:36 | 2973825 Stuntgirl
Stuntgirl's picture

Good for your daughter!!

I had a history teacher in highschool who also went completely off script to make us do the math of pensions.

Everyone walked out having discovered Ponzi. We called it Pyramid Fraud back then.

Half of my classmates who studied with that teacher invest in real assets, including arable land and cattle, and are building their own self-sufficient houses.

Mon, 11/12/2012 - 15:50 | 2973685 nofluer
nofluer's picture

Am I correct in assuming that Northerngirl is being facetious? Voting up on that basis... (Knew her on Newsvine - and she was pretty sharp over there...)


Mon, 11/12/2012 - 14:02 | 2973256 Chuck Walla
Chuck Walla's picture

Though he was unaware, Charles Ponzi deserves a debt of gratitude for giving the state the germ of an idea for unfunded pension and social security plans. Vote buying on a massive scale and no taxpayer dollars used(for once). Its brilliant. Politicians have successfully handed out empty candy wrappers while convincing the dimwit class they are full of sugary goodness.



Mon, 11/12/2012 - 14:04 | 2973266 BattlegroundEur...
BattlegroundEurope2011's picture

Not to worry the UK govs. will (and already started) increase the Pension age.  So most likely ppl will be dead before they can retire.


Mon, 11/12/2012 - 14:06 | 2973275 QuietCorday
QuietCorday's picture

I am British and my retirement age now stands at 68. I strongly suspect this will rise over the next twenty years to something more like 75, maybe even 80.

Britain is screwing its young like no tomorrow. No, strike that -- it is eating its young. Taxes have increased dramatically since 1997 to fund our joke of a government spend (council tax has doubled, VAT up, petrol is a joke due to the escalator, new taxes on utilities etc ...), and wages are pretty much stagnant, if you can find a job in the first place that is.

Not only that but we didn't have the housing crash the US had, so on top of all this ... house prices are still somewhere in the region of £200,000 ($318,000) for a tiny two-bed semi in a reasonable area (read: not heading towards slumsville) outside of the South East. The transfer of wealth from young to old is astonishing; you get old ladies selling houses 40 miles away from a urban centre, but demanding ten times the average local full time salary for about 700 square feet of living space in total (no joke, Americans would class some of the kitchens I have seen as cupboards).

I live in an area where there are no jobs. I commute for four hours round trip for a just above average wage, and then freelance on top of that. The average salary in this area is about £24K pa. The average family home (three bed with a garden and a drive) now stands at £250K in our area. No-one under 35 can afford pretty much anything at all, and we are being chipped more and more with every passing year.

Yet the sheer number of Porsche Cayennes and top of the range Mercs on our roads is extraordinary -- all driven by retired boomers who can also claim winter fuel allowance.

My generation and the two below me just cannot afford to keep this ludicrous state of affairs going. We just don't earn enough. We are being slowly impoverished.



Mon, 11/12/2012 - 14:58 | 2973480 reload
reload's picture

Agree 100%. But most of those cars are either on finance, and if not the driver will be enjoying a solid gold government pension. Most of the retirees I know who are living on svings are beink killed by zirp. There are a small minority with fairly bullet proof `final salary` schemes from big firms like ICI, BT, BP etc, but nobody coming through the ranks below board level is going to be getting the likes of them again. Below top management its `buy your own` these days.

All the final salary schemes opperated by HMG are systematicaly abused by the arms of government that bestow them. Just prior to retirement - hey presto: automatic promotion - give the future tax payer the bill. Civil service, armed forces, police, local government they ALL do it and have dome for decades.

Mon, 11/12/2012 - 16:41 | 2973839 Stuntgirl
Stuntgirl's picture

You have described Spain in 2007.

Mon, 11/12/2012 - 17:58 | 2974112 Floodmaster
Floodmaster's picture

A generation born to a life of servitude.

Mon, 11/12/2012 - 14:07 | 2973282 Lewshine
Lewshine's picture

Add a million zeros to the EU obligations...Means nothing! If it did, it would have already! The more ridiculous, the greater the fraud, the more jaw dropping the result of recovery...Be it fake or not! The abuse of law, coupled with propaganda, creates longevity!

Mon, 11/12/2012 - 14:20 | 2973326 q99x2
q99x2's picture

That is soo Greek. Lie to the people then when they complain starve them. Ooooo I don't like banksters.

Mon, 11/12/2012 - 15:45 | 2973670 nofluer
nofluer's picture

While Unions are being so supportive of the Liberal Left, and as a consequence negotiating record or near record pension promises, perhaps they should re-evaluate that political support as they consider that a promise is not a delivery. ie it's EASY for governments to promise pension payments for 20 or 50 years down the road... not so easy to deliver on the promises made 20 or 50 years ago!

At a certain point in the past, I was asked if a certain person (not me) should contribute to a 401k. My response was simple - "Does your employer provide matching amounts in excess of 50%? If yes, then you should participate. If no, forget it. And at that point in the future when you leave the company, you cash out and pay the tax penalty, and reap a 40%+ profit. It's like giving yourself a tax deferred raise!" It was really fun to see this person spend the money from a company that paid 200% matching!!!

Do *I* have a retirement fund? Nope. Given inflation and the direction I saw the economy going in as long as 30 years ago, I prefer the "I NEED my money NOW!" approach. (aka pay me as I go.) I worked for the US Postal Service for 11 years. When I left I took my money with me and paid off ALL of my debts with it!

Not being entirely stupid, yes... I have made inflation proof investments - ie we are really close to paying off the mortgage on the farm. As long as we can climb up on the tractor, poke a few seeds in the garden and pick up sticks for the wood stove, we'll get by.

In short - WE control our "retirement" provisions - not some corporation or bank or government. As my mother used to say, "You can't eat promises."


Mon, 11/12/2012 - 16:02 | 2973722 El_Puerco
El_Puerco's picture

¿A ver aquí les va un acertijo? ayuden mee a resolverlo?.... ¿En qué país , la deuda es 1,000% del PIB ? Guess Which Country Has Debt Of Nearly 1000% Of GDP?...



Mon, 11/12/2012 - 16:05 | 2973730 nofluer
nofluer's picture

Just a wild guess... Argentina?

Mon, 11/12/2012 - 16:17 | 2973767 ShrNfr
ShrNfr's picture

Nope, read my comment earlier. The US future obligations in present day dollars are 1,350% of the GDP according to the CBO. $220,000,000,000,000 and increasing at ~5% a year or $11,000,000,000,000. Good luck with that. This is including medicare, social security, the drug bene, and all the rest.

Mon, 11/12/2012 - 18:52 | 2974301 giggler123
giggler123's picture

Nothing like a world war to trim that down to size.

Mon, 11/12/2012 - 18:56 | 2974306 shovelhead
shovelhead's picture

I'm glad I live near a college town.

Them young uns are pretty tender except for their texting thumbs.

Long pig...the other white meat.

Mon, 11/12/2012 - 18:58 | 2974311 dolph9
dolph9's picture

Well, look.  If you're modern national mythology is that you saved the world from those evil Germans, then don't be surprised if you eventually end up the slave of the Jewish banksters who run America.

Mon, 11/12/2012 - 22:26 | 2974887 Pseudolus
Pseudolus's picture

At what point does an inter-generational transfer scheme become a Ponzi?

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