The GMB trade union has dismissed as ‘bonkers' claims made earlier this week that a Whitehall tangle over pensions reform could cost the public purse an extra £9bn annually.

A study issued by the Centre for Policy Studies think tank on Monday argued conflicting Coalition pension reforms – the public services pensions Bill and plans to create a new single-tier pension – were to blame for a potential massive hike.

‘This is looking like a classic example of the Treasury and DWP operating in silos and not talking to one another,' report author and actuarial expert Michael Johnson told The MJ.

His report entitled ‘A toxic tangle' claimed the interaction of the reforms could load £3.4bn costs due to an end to contracting out arrangements and a further £4bn hit due to public sector staff enjoying the benefits of both better schemes and higher accruals from the Department for Work and Pensions plans to introduce single-tier schemes.  It calculated an additional £2bn should be factored in to account for the wrong assumptions about how long people would live.

But in response, Brian Strutton, GMB national secretary for public services said: ‘It is now clear that CPS are wrong on three specific points regarding their claim of an additional £9billion costs to public sector pension schemes. The conclusions they arrive at, based on these non- existent costs, do not follow and in fact are completely "bonkers".'

Mr Strutton said the CPS's argument that the public sector schemes should be renegotiated was ‘completely groundless'.  ‘The CPS has taken some effects and cost changes to the state flat rate pension; muddled them up; mixed in some non -existent cost; and erroneously presented these as new costs to public sector pension schemes,' he said.

A Department for Work and Pensions spokesman said the department ‘simply do not recognise the figures as presented'.

‘The new Single Tier state pension will be more sustainable and cost the taxpayer no more than the current system,' the spokesman added. ‘To make the state pension simpler and easier to understand, contracting out must end, meaning both employees and employers across the public and private sectors will pay National Insurance at the standard rate.'

A spokesman for the LGA said: ‘We were already aware of the local government issues raised in this report. We have been working with the relevant Government departments on options to ensure the right outcome is reached so that employers, workers and taxpayers get a fair deal from the reforms.'