TUC backs SDR formula to Hutton

The Trades Union Congress (TUC) is to publish its response later this week, with an attack on the Public Sector Pensions Commission (PSPC) claim payments to retirees are 40% higher than current estimates because of the price of government borrowing.

Existing calculations are based on the social discount rate (SDR) formula, which is based on various quantified measures of risk, including interest rates and inflation.

A report by the PSPC – an Institute of Directors subsidiary – criticised the measure, claiming index-linked gilt yields are a more accurate portrayal of long-term pension costs.

But TUC campaign chief Nigel Stanley argued SDR is an internationally recognised method of calculation and the means by which the UK government works out all its future spending commitments.

“If they increase their assumptions for pensions, they’ll have to do the same for all kinds of spending, with serious consequences for the amount of money they could commit to important projects,” he claimed.