Taxpayers face a £30 billion annual bill to fund pension promises made to the UK's public services, more than twice the officially accepted cost, according to a renowned pensions expert.

The Treasury is dramatically understating the true cost of maintaining final-salary retirement policies for public servants, John Ralfe says in a speech to be delivered today.

Mr Ralfe, a pensions consultant and a former finance director of Boots, the chemist, argues that methodology used by the Government to calculate its liability, after employees' contributions, is more than a decade out of date.

He will accuse the Treasury of “moving the goalposts” after it fixed the rate that it uses for the calculation in a move that disguises the true rise in costs.

“As part of good financial and economic management, the Government has to be clear and transparent about the cost,” he will say.

Public sector pension schemes have about 7.5 million members, including 3.25 million current staff with a pensionable payroll of £90 billion.

If Mr Ralfe's analysis is right, it will raise pressure on the Government to defend its pension provision in the public sector, where labour-intensive councils are among the few employers retaining final-salary schemes.

Public sector pensions are unfunded - there is no separately managed pot of money drawn on to pay them - so the cost to the taxpayer is effectively calculated using discounted government bond, or gilt, yields indexed to inflation.

The Government fixed this rate at 3.5per cent in 2001.

Yields have been falling since 1997, when the Government made the Bank of England independent. According to Mr Ralfe, a more accurate yield is 1.2 per cent, dramatically increasing the real cost of retirement provision.

The Treasury stands by its calculations, which sources said are supported by the independent Accountancy Standards Agency. “Public service pensions are affordable now and into the long term,” the Treasury said.

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