Nigel Farage has called for a major review of public sector pensions, describing them as “Ponzi schemes” after new figures revealed that a quarter of council tax revenue is being used to fund staff retirement pots, as reported by The Telegraph.
The Reform UK leader warned that generous public pensions represent the “biggest ticking time bomb” in government finances and criticised the stark contrast with private sector pensions, which he referred to as “pensions apartheid.”
Farage, who recently positioned his party as the “real opposition” to Labour, has urged ministers to debate the issue, accusing successive governments of failing to tackle it.
His comments follow revelations that £1 in every £4 raised through council tax was spent on local government pensions last year. Farage told The Telegraph:
“Public sector pensions are the single biggest ticking bomb in our government finances. It’s a massive, massive problem. We can talk about GDP and the national debt, but none of that includes any guestimates as to what that will cost us [in pension payments] in 15 to 20 years’ time.
The Local Government Pension Scheme (LGPS) offers retirees a guaranteed income for life, adjusted annually for inflation. Contributions are made by both employers and employees, and the scheme is funded, meaning contributions are invested to meet future obligations. However, an investigation by The Times found that councils contributed nearly £7 billion to these pensions over the past year.
Separate analysis by The Telegraph indicates that around two million LGPS pensions are already being paid out to retirees, with the average household contributing more than £230 annually through council tax.
While the LGPS is funded, most other public sector pensions—including those for teachers, NHS staff, and civil servants—are not. This means contributions are immediately used to pay current retirees rather than being saved for future obligations. An expert has estimated the total UK public sector pension liability at £4.9 trillion, equivalent to £173,000 per household.
A spokesman for the Local Government Association defended the LGPS, saying it supports recruitment and retention efforts. A government spokesperson added:
“Public sector pensions are an important part of the remuneration package for hard-working public sector workers and strike the right balance between rewarding them and being fair to the taxpayer.”
