The issue of final-salary pensions is another elephant in the room

The elephant in the room is the budget deficit, the Liberal Democrats' Vince Cable said the other day. But there is another – the unfunded guarantees given to public sector employees who enjoy final-salary pensions. Aegon UK, the pensions group, drew attention to this elephant when launching its "pension manifesto". The numbers are not new but deserve repetition: the most recent official estimate puts the present liability of public sector pensions at £770bn. Consultants Towers Watson have calculated the figure at more than £1 trillion. "Either way," comment the report's authors dryly, "this represents a significant cost to future taxpayers". Then there's the longevity issue, which affects all pension provision. In 2007, the number of people in the UK above state pension age exceeded those under 16 for the first time. As strikingly, the number of people aged over 100 is projected to rise from 12,000 today to 280,000 by 2050. The Aegon report makes plenty of useful recommendations, many of them uncontroversial. But one towers above all others – the need for a review of public sector pensions to get the liability under control. The report does not say so, but perhaps the best hope lies with a coalition government since cross-party support for change is crucial.