Malcolm, If what you say is true, and I have no reason to believe that this is not the case, then may I suggest one way of plugging the gap would be for public sector employees to no longer have final salary pension's schemes? These schemes are no longer the norm in private industry, even among large multinational companies as they are not economically viable. Private industry and individuals should not bear the burden of public sector pension short fall. Before you assume I am some sort of Thatcherite Nazi, I believe they should be adequately compensated in terms if their basic salary.