Ros Altmann: It is time to harness the benefits of pensions to improve people’s lives
Local Government Pension Scheme (LGPS) surpluses justify diverting employer contributions to fund local services such as social care, former pensions minister Baroness Ros Altmann says.
The peer said the LGPS in England and Wales had a surplus of around £150bn at the end of March 2025 – a surplus that was likely to have improved further since last year.
Altmann said that, despite this, councils currently plan to pay around 20% of council tax receipts into their pension funds as contributions.
She said local authorities should stop "wasting" council tax on pension contributions and use the money for social care instead, as funding for which mostly falls on councils.
Altmann said: "The prime minister has promised to address the social care crisis, and has asked Baroness Casey to recommend long-term solutions, but she will not report before next year and money will need to be found to fund an improved system.
"In the meantime, however, council pension contributions could be diverted for the next couple of years. A significant part of the care crisis is that the system has been woefully underfunded for years. Pensions could ride to the rescue for now, to help relieve so much family misery resulting from councils cutting care provision."
Altmann added: "While many vulnerable, disabled or elderly residents are struggling to get the care they need from their local authority, councils are spending millions on pension contributions. Local services are being cut, libraries are closing, potholes are growing and large rises in council taxes are being proposed. This is not what people should be paying council tax for.
"Instead of putting more money into these pension schemes which already have more than they need, I suggest councils could take contribution holidays for the next two or three years."
Altmann said that, while most councils are planning to cut contributions, there is room to pause them completely for at least a couple of years – "radical change" she said could ensure taxpayer money is much better used and can also take the pressure off council tax increases.
She cited Manchester as one example – noting it pays over £50m a year into the LGPS while the Greater Manchester Pension Fund has a £5bn surplus.
Altmann continued: "This is the picture across Britain. It is time to harness the benefits of pensions to improve people's lives. Pensions should be about people, not just about money and after years of huge contributions, now is the time to regain some freedom."
She added: "Increasing sources of funding for social care will not be an easy decision, but money could be available straight away if the political will is there.
