THE government is facing calls to reveal the true cost of public sector pensions after it emerged that they are worth more than 15 times those of private sector workers.

Opposition politicians and business leaders have joined forces with the CBI employers’ body in demanding an independent investigation into the generous final salary pensions awarded to millions of civil servants, NHS workers and teachers at an estimated cost of up to £1 trillion to the taxpayer.

Ministers are accused of recklessly failing to address the ballooning costs of public sector pensions because they fear a backlash from trade unions.

Richard Lambert, director-general of the CBI, said: “A lot of businesses have made painful decisions to reduce the benefits of their pension schemes in recent years. They feel resentful that the public sector has not grasped the nettle.

“It is clear the private sector has found final salary pensions schemes are now unsustainable, so for the public sector to breeze ahead having made only very modest changes to their pension arrangement seems to be unjustified.”

The average public sector worker will be entitled to a pension worth £17,091 a year, according to data compiled by Ros Altmann, a former adviser to Tony Blair. By contrast, the average private sector pension annuity last year paid £1,086.

The Taxpayers’ Alliance has obtained figures showing that 17,150 public sector workers have already retired with pension pots worth more than £1m each. Nearly 10,500 NHS workers; 3,680 civil servants; 815 judges; 1,800 teachers, mainly former heads; and 167 Royal Mail staff have retired on seven-figure pension funds.

It says council taxpayers in England and Wales are each contributing an average £226 towards the pensions of local government workers.

However, the BBC and the parliamentary pensions fund refused to release figures of how many retired staff and MPs have £1m pension pots.

Generous pensions have traditionally been regarded as a necessary for public sector workers, who in the past commanded lower pay than the private sector. But under Labour, public sector earnings have overtaken the private sector.

According to the Office for National Statistics, the average public sector worker earned £25,896 a year in 2007, compared to £22,828 in the private sector. Only the top 20% of private sector workers are paid more than public sector peers.

Altmann said: “Public sector pensions are now being propped up by Alice in Wonderland economics.”

It would cost £427,275 to buy an annuity delivering the average public sector pension of £17,091 from an insurance firm. The Association of British Insurers said that the average private sector pension pot used to purchase an annuity in the UK last year was just £24,150.

Philip Hammond, shadow chief secretary to the Treasury, said: “The growing gap between public and private sector pensions is creating an apart-heid which is unhealthy in society and damaging to our economy. We need an open debate about the scale of public sector pension liabilities.”

In 2006 the government raised the retirement age of new entrants to public sector pensions schemes and made a series of other changes in a bid to reduce its pension costs by £13bn. These reforms will only cut its pension bill by 1% over the next 50 years.

A spokesman for the Treasury said: “High-quality pension provision is a key part of the remuneration package of public servants, aimed at maintaining a high-quality public sector workforce. These pensions are fully costed and fully affordable.”

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts