The deficit in the D.C. government's employe retirement system will climb to a staggering $8.8 billion in 25 years unless Congress increases its annual payment to the fund, according to new figures released by the D.C. Retirement Board this week.

The new estimate of the potential unfunded liability of the retirement fund for the city's teachers, police, firemen and judges is about $2.2 billion more than the U.S. Treasury Department projected in a study it prepared in 1980. Inflation was the major cause of the increase, according to Donald S. Grubbs Jr., the pension board's actuary.

Frank Higgins, chairman of the retirement board, told a House Appropriations subcommittee Tuesday it is imperative that the federal government increase its $52 million annual contribution to the retirement system to avert the massive deficit.

Several members of the House District of Columbia Committee, which oversees the D.C. government, said yesterday they were stunned by Higgins' projections but saw no possibility of Congress voting additional funds for the system this year.

"There's virtually no chance for increased funds . . . with all of the fiscal conservatives around here," said D.C. Del. Walter E. Fauntroy, a member of the committee. "I must say I'm shocked and amazed by (Higgins's) statement."

Rep. Stewart B. McKinney, (R-Conn.), the ranking minority member of the committee, noted that former Democratic President Jimmy Carter vetoed a measure that would have provided the retirement system with more in federal funds.

"The Carter administration stonewalled us and I have no doubt the Reagan administration will do the same thing," McKinney said. "The unfunded pension liability problem is strictly a federal problem. The federal government designed and built and passed this program, but getting it to approve more money for it is like whistling in the wind."

Congress passed the D.C. Retirement Reform Act in 1979, establishing three major city-administered pension funds for teachers, police, firemen and judges, but did not provide sufficient funds to permit the new system to become self sustaining through investing its assets.

The city currently contributes $130 million annually to the system, and city employes pay a total of $21.4 million a year.