Billions of pounds will be added to the UK’s public sector pensions bill following Wednesday’s inflation announcement, analysis shows.

Chancellor Rachel Reeves will have to find more than £900m to pay existing retirees next year, with the long-term cost reaching almost £20bn.

Billions more will be added to the pension pots of current public sector workers.

It comes as the Chancellor is already planning measures to raise £40bn in the upcoming Budget.

Public sector pensions rise every April by the consumer price index (CPI) figure for the previous September, which has now been confirmed as 1.7pc.

They are enjoyed by around 82pc of the UK’s public sector workers and most provide a guaranteed income for life.

The cost of public sector pensions was already forecast to be £54.3bn for 2024-25.

According to Neil Record, a former Bank of England economist, this will rise by around £923m when the increase is added in April. However, he also warned that the true figure would be much higher.

Mr Record said: “Public sector pensions have uncapped index-linking and CPI will increase the cost by around £923m a year. This year inflation is marginally under target, but two years ago it was 10.1pc and the uncapped nature is unique in the UK pensions sector.

“The uncapped index-linking is reemphasising the uniquely generous nature of public sector pensions.

“The overall cost to the Government is also much higher, about 20 times that number, because the duration of pensions is about 20 years, so the overall increase in liability is about £18bn.”

The millions of public sector staff who are still working will also benefit from the 1.7pc pensions increase.

John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Taxpayers will be once again picking up the bill for even higher public sector pensions. These gold-plated retirement schemes become more unaffordable year after year.

“If the Government wants to fix the black hole, it must move public sector workers onto a defined contribution scheme.”

During her time in office, Ms Reeves has already signed off pay rises of up to 5.5pc for millions of public sector workers and 22pc for junior doctors to try and halt further strikes, which will also increase their pensions.

Public sector workers have seen their pensions jump by around 35pc over the past decade.

Taxpayers have also been handed a £208bn bill because pension contributions over the past decade have not met the cost of what will be paid out to retirees.

According to Mr Record, the UK’s overall pensions bill is already around £4.9 trillion.