Scotland’s 11 Local Government Pension Scheme (LGPS) funds have proposed allocating 5% of their assets to Scottish investments spanning climate transition, housing, infrastructure and private markets.
Based on combined assets of £67.1bn at 31 March 2025, the proposed allocation would be worth around £3.4bn.
The proposal requires approval from the pension committee of each administering authority, according to a new report from UK Private Capital.
The report was developed through UK Private Capital’s LGPS expert panel, drawing on interviews with LGPS pools, administering authorities and private-capital managers across England, Wales and Scotland.
The Scottish funds discussed potential forms of collaboration earlier this year before drawing up a Memorandum of Understanding (MoU), which sets out how collaboration within the Scottish LGPS could evolve.
The 11 funds held combined net assets of £67.1bn at 31 March 2025, although the MoU, included in the UK Private Capital report, puts their combined assets at around £75bn.
“Building on a track record of strong investment performance and robust stewardship, the Scottish LGPS Funds will work together to enhance investment opportunities, improve efficiency, support Scotland’s sustainable economic growth (where this aligns with their fiduciary duty), and formalise the successful collaborative behaviours already underway,” the MoU stated.
Some Scottish funds already collaborate, including by sharing due diligence, but the Scottish LGPS currently has no asset pools, unlike England and Wales.
The Pension Schemes Act 2026 contains provisions enabling the Scottish government to introduce pooling in future. The provisions were included at the Scottish government’s request to preserve flexibility should it choose to introduce pooling, although there are currently no plans to do so.
Earlier this year, the Scottish Borders Council Pension Fund confirmed a £30m (€34.2m) commitment to a new UK social investment fund launched by M&G.
According to the pension fund, the commitment makes the council one of the first investors in the M&G UK Social Investment Fund.
The UK Private Capital report also said the three LGPS pools it interviewed in England and Wales want private-capital managers to provide regional-impact data, including metrics covering gross value added, job creation and wider economic contributions.
The three pools were Border to Coast Pensions Partnership, LGPS Central and Wales Pension Partnership. One unnamed pool suggested such reporting could become as important as ESG data, according to the report.
The findings follow UK LGPS funds and their investment pools advocating a strategic framework based on place-based investing.
