The government's liability for public sector pensions has grown so much in recent years that it now outstrips the national debt. Actuarial consultants estimate that outstanding pensions payments total £690 billion.

This revelation comes as trade unions stage nationwide protests against the changes ministers are planning to make to the pensions of public sector workers.

Stakeholder Response: Association of Chartered Certified Accountants

Andy Wynne, head of public sector technical issues at ACCA (the Association of Chartered Certified Accountants) said: "The real scale of the pensions problem in the public sector remains uncertain.

"Although the public sector has now largely adopted the accountancy profession's general standards on accounting for annual financial results, these standards may be less effective in reporting the significance of the much longer time scales for which pension funds are managed.

"In addition, relatively minor changes in long-term assumptions can have major impacts on the estimated financial health of pension funds - information now translated fairly directly into the bottom line profit figure [or surplus/deficit for local government].