James Moore: Cost of tackling pensions crisis will only be more painful if we keep ignoring it

Outlook We've become so used to hearing about a pensions timebomb that it's really very easy to respond with a shrug of the shoulders and a quick "la la la, heard it all before".

The trouble is that the fuse is so long that it is literally years before there is any prospect of an explosion. So excitable talk of "crisis" can be very easily dismissed as an exaggeration, or even a cynical ploy by the pensions industry to persuade pension providers to splash out on its consultants.

Yesterday's figures from the Pension Protection Fund suggest that a change in that thinking might be in order because that fuse is getting a lot shorter.

According to the PPF the aggregate deficit of the 6,432 private sector schemes in its PPF 7800 index ballooned to £312.1bn at the end of May 2012 from £216.8bn at the end of April. Some 5,503 schemes were in deficit with only 929 in surplus.

Part of the reason for this is the fall in the yields on government bonds, which have a major influence upon the way the liabilities are totted up. This has been caused by the fact that, for some reason, international investors see the UK as a safe haven. Demand for our debt keeps yields low.

Now here's the bit where it gets interesting. The fund has been producing stats (some of which are backdated) for the last 10 years or so. John Ralfe, the pensions guru, has been looking at them and points out that in March 2003 the FTSE 100 stood at 3600 (as opposed to nearly 5500 today) while BT's pension deficit stood at £9bn.

And yet, despite talk of the sky falling in at the time, the aggregate deficit was much lower than today. Even with BT's enormous problem, which has been substantially reduced with the help of a £2bn cheque.

In fact at the current time schemes have their biggest collective funding shortfall since the PPF started crunching the numbers. Even though it has switched from the RPI measure of inflation to the lower CPI measure, which ought to make things easier.

Quite how the Pensions Regulator will react to this is anyone's guess. But certain finance directors have cause to be frightened: if the watchdog decides to take a hawkish stance they might have to find an awful lot of money. Quickly. Companies with big pension shortfalls tend, funnily enough, not to be blessed with big cash piles. It's worth noting here that the sharp rise in liabilities facing the private sector will also be facing the public sector, where schemes aren't backed by any assets at all.

These liabilities don't appear on the Government's books because if they did those books would make Spain's look like Germany's. But the money to pay the pensions still has to be found.

It seems harsh, particularly given that public sector employees are facing wage freezes, job cuts and a battering from ideologically driven ministers, but the Coalition mightn't have any choice but to take a hard line on the issue. Of course, the bitter pill would be easier to swallow if, say, MPs or senior civil servants suffered equally along with everyone else.