The CBI is pressing the Government for greater accountability and transparency on public sector pensions, especially the unfunded retirement provisions for up to five million nurses, teachers and civil servants.

The lobby group for British business wants an independent commission to review the cost of public sector pensions, which it estimates will be more than £915 billion by 2050. It is floating the idea of increasing the retirement age for public sector workers from 60 to 65 and has demanded that the Government use up-to-date projections for how long people live after they stop work.

John Cridland, the CBI's deputy director-general, said companies in the private sector had already had to face up to the burgeoning cost of their pension obligations and it was time for the Government to do the same. He said that private sector employers wanted a level playing field in pension provision, arguing that private companies securing government outsourcing contracts often found they had to double pension contributions to the transferring staff.

“The cost of balancing the books needs to be in the public domain in a way that it is currently not,” he said.

Mr Cridland said that the Government's most recent estimate in March 2006 that its pension liability was £650 billion was wildly out of date.

He also said it was no longer true that wages in the public sector lagged behind those of private companies, a traditional explanation for strong public sector pension provision.

The CBI's call for a commission was aimed exclusively at the Government's unfunded pension obligations, where contributions were fed directly into Treasury coffers rather than managed separately by City funds, he said.

The business group insisted it had no agenda over public sector pension reform and was not calling for the end to final-salary pension schemes for civil servants.

But its comments set it on a collision course with unions, which see a strong pension scheme as central to employment rights.

Brendan Barber, general secretary of the TUC, dismissed the CBI as “behind the times”. Mr Barber said that unions had agreed substantial reforms, including increasing the retirement age beyond 65 in some circumstances.

He contrasted this with the “gold-plated” pension arrangements agreed in company boardrooms, while private sector final-salary schemes were being shut in droves because they are seen as too expensive.

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