The Local Government Pension Scheme (LGPS), which helps provide the pensions of nearly 7 million , currently has an extra £87bn, which is being eyed by the Labour Government as part of its plans to encourage more pension schemes to invest in the UK economy.

But one expert has called for some of the money to be used to help plug a £8 billion funding gap in local services, including bin collections, road repairs, and street lighting.

Earlier this year, the Daily Express reported how local councils are being pushed towards the as they face a multibillion-pound funding gap, a bombshell report warns. Almost three in four Town Halls in England say they are struggling to balance the books with a funding gap of more than £8 billion by 2028/29.

At the Pensions and Lifetime Savings Association's annual local government conference in Bedford this week, Toby Nangle, a commentator at the Financial Times, said one council had already taken pension contribution breaks to help fund public services.

He cited the example of Kensington and Chelsea council's pension fund choosing to reduce its contributions to 0% to help fund services, including compensation for the Grenfell Tower disaster.

Mr Nangle said: "I'd expect many more to be in a position to do same sort of thing, especially in the context of crunch local government spending. You know, the way in which a resident, if you all are of councils, you see Council services under pressure.

"And if there's if there's a possibility without it blowing pension scheme, you reduce the amount that goes into it and everyone's happy. That sounds like quite a compelling argument."

The LGPS, which has total assets worth £415bn, provides guaranteed pension pots to workers, although many of them will be low-paid; the surplus amount is what is left over after all the pensions of both current employees and retired employees are paid.

However, some commentators have pointed out that the surplus could be used to provide the pension fund with reserves or used to help address the generational pension gap.

Rachel Wood, head of the West Sussex pension, told the PLSA conference that pension funds need to adopt a measured approach. She said a pension fund's role is not to hold on to an excess, nor to draw on it too quickly

"Surplus for a long-term employer is a measure and a day-to-day tool. Surplus for shorter-term employers can be everything."

"It's not for us, but it's there to illustrate benefits that have been accrued, future benefits that will be accrued, and then those new members coming into the scheme."