Pensions UK welcomes intent to increase scale and strengthen governance but urges practical, proportionate reform for LGPS in England and Wales

Pensions UK has published its response to the Government’s ‘Fit for the Future’ technical consultation on reforms to the Local Government Pension Scheme (LGPS) in England and Wales.

Pensions UK welcomes the Government’s ambition to bolster governance, accountability, and investment practices, while increasing scale and further consolidate assets in the LGPS. But we continue to call for a more practical and proportionate approach to ensure new regulations deliver the best outcomes for scheme members and local authorities.

Key themes and recommendations

Regulatory burden and proportionality: The requirement for pools to hold the full suite of FCA permissions is seen as disproportionate, potentially increasing compliance costs without clear benefits. Pensions UK recommends allowing the FCA to determine the necessary permissions pools will need.

Safeguarding local accountability and fiduciary duty: There is significant concern that new powers for the Secretary of State to direct AAs to a pool could undermine local authority, accountability and fiduciary responsibilities. The response urges that such powers be exercised only "in consultation with the AA" and that statutory powers should not override existing shareholder agreements.

Implementation timelines and practicality: Some deadlines, including those for AAs to publish the ISS or transition of assets are seen as impractical. We suggest more flexibility to address real-world, practical constraints.

Investment advice: Pensions UK urges that AAs retain access to independent advice. A balanced approach - combining pool advice with independent checks - is needed to safeguard fiduciary duty and ensure robust governance.

Role and scope of asset pools: Pensions UK expresses concern about the new regulations expanding pools’ responsibilities beyond what was originally envisaged. We recommend clarifying that pools should advise on strategic allocation and implementation only.

Governance and oversight: The introduction of roles such as the Senior LGPS Officer and Independent Person is broadly supported. However, we call for flexibility in implementation, especially for smaller funds and single-purpose authorities, and highlight the need for clear guidance on responsibilities.

Knowledge, training, and enforcement: Extending formal knowledge requirements to committee members is useful, but Pensions UK emphasises practical and balanced implementation. We support refreshed frameworks and introducing enforcement measures for compliance and effectiveness.

Independent governance reviews: While recognising the value of strong governance, Pensions UK questions the cost-effectiveness of these reviews, suggesting that existing local pension boards could fulfil this role more efficiently. We encourage authorities to publish action plans in response to review findings to maintain public confidence.

Maria Espadinha, Policy Lead for LGPS at Pensions UK said: “We support the drive for increased scale, stronger governance and accountability across the LGPS, but it is crucial that new regulations are proportionate, workable in practice, and do not undermine fiduciary duty or local decision-making.

“Our members have identified a number of operational, legal and practical challenges that must be addressed if the reforms are to deliver their intended benefits for scheme members.

“The LGPS is one of the largest and most successful funded pension schemes in the world. Its strength lies in local accountability and deep understanding of members’ needs. Any regulatory changes must enhance, not erode, these foundations.”

Click here to read Pensions UK’s submission in full.

Mark Smith, Head of Media Relations
020 7601 1726 | [email protected]

Cali Sullivan, Senior PR Manager
020 7601 1761 | [email protected]