UK - The Treasury has been criticised for not disclosing the level of expenditure it will in future consider sustainable in regards to the UK's public sector pensions.

In its report, the Parliamentary Public Accounts Committee also noted that one of the main means of saving was to introduce cost-sharing, a "very, very short-sighted" measure critics said would lead to members opting out.

MP Margaret Hodge, chair of the Committee of Public Accounts, noted that the previous government's reform efforts in 2007-08 would likely result in expenditure stabilising at around 1% of GDP. However, she criticised that the Treasury had yet to set out what it considered sustainable in the long term.

"Instead, officials appeared to define affordability on the basis of public perception," Hodge said.

The chair further said that, following the consultation on discount rates, which resulted in rates being lowered to 3% above the consumer price index, publishing a timetable for how the cost-sharing and saving measures would be introduced was a necessity.

Cost-sharing will likely be allowed by asking employees to pay higher contributions, coming at a time when significant public sector layoffs are occurring as part of the government's policy to reduce the UK deficit.

Opponents, such as the London Pensions Fund Authority's chief executive Mike Taylor, have warned that these increases, at a time of wage freezes, would increase opt-out rates significantly.

He said surveys, including one by the GMB trade union, indicated participation in schemes was already falling, but he did not believe this would deter the Treasury from proceeding with its proposals.

"We've been working very closely with the Department for Communities and Local Government (DCLG), which has been debating this with its Treasury colleagues, and I think Treasury is only focused on the short-term cash horizons for this parliament."

Taylor said, given that many pensioners would live to be over 100, to look at it on a four-year basis was "very, very short-sighted".

He said concerns had been raised through a number of channels, including by industry professionals and local politicians, but only presented to DCLG and not to Danny Alexander, chief secretary to the Treasury, as they had been unable to contact him.

The committee's chair also noted that the Treasury had yet to take into account the changes to contribution rates could lead to additional spending in future - in the guise of means-tested benefits, for example.

Hodge said: "Public service pensions policy must not be determined in isolation from other areas of public policy and spending."

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