Pension’s analyst and author of the report, Michael Johnson, told Sputnik: "This is unprecedented in history in terms of the rate of unfunded promises made for today’s pensioners — which will have to be met by tomorrow’s tax payers, like Generation Y".
Johnson says that Generation Y could be the first generation to experience a quality of life below that of its 'baby boomer' parents.
Johnson's new research is based on the UK Treasury’s ‘Whole of Government Accounts’ (WGA), whose balance sheet includes many of the unfunded promises (liabilities) that the baby boomers have been making. Johnson said:
"It’s completely unsustainable. The rate of promise creation is completely outstripping Britain’s economic growth. If the two were in step with one another, it would be less of an issue and the nation could afford to meet those promises. But the promises are running away from us, and in terms of the scale it is unprecedented."
The report found that the gap between the nation’s assets and liabilities grew by an "unsustainable 51%" between 2010 and 2014 to £1,852 billion ($2, 841 billion).
Generation Y? Bad news, I'm afraid. You have £6 trillion of unfunded liabilities. pic.twitter.com/CoweiepOIp— Jolyon Maugham (@JolyonMaugham) June 3, 2015
"At 111 % of GDP, this is equivalent to £70,000 ($107,000) per household – if the State Pension, the largest of unfunded liabilities (roughly $6,000 billion) is included the burden per household rises to £221,000 ($338,000)."
Johnsons says "baby boomers have become masters at perpetrating inter-generational injustice, by making vast unfunded promises to themselves, notably in respect of pensions. Such is their scale that if the UK were accounted for as a public company, it would be bust".
"The challenge is to encourage Generation Y to wake up to this fact. And that’s who this paper is aimed at – the thinkers of today. The core generation Y, those who are in their late teens or early 20s whose voices are not heard in parliament."
"What is staggering is how asleep most people are on this subject. It’s just too easy to pretend it’s not there. The national accounts exclude these large unfunded promises and that is part of the problem."
Johnson’s report outlines six proposals to improve transparency and stop deferring costs.
"Generation Y has got to wake up," says Johnson to a debt burden predicted to be £221,000 ($338,000) per household.