Unfunded public sector pension liabilities could saddle the UK government with a debt of around £550bn (€822bn), more than 50% higher than the most recent official estimate, according to consultants Watson Wyatt.

The European investment consultant said the last published estimate for the value of the liabilities in the unfunded UK schemes, principally for teachers, National Health Service workers, civil servants and the armed forces, was £380bn at 31 March 2002.