The UK government is planning targeted changes to proposed local government pension scheme (LGPS) regulations following industry concerns over their potential impact on fiduciary duty and local decision-making.
The Ministry of Housing, Communities and Local Government (MHCLG) launched a consultation in November 2025 on two sets of regulations to implement the ‘Fit for the Future’ reforms to LGPS investment and governance.
Under the proposals, administering authorities would be required to delegate implementation of their investment strategies to asset pools, which would control and manage assets and provide principal investment advice.
The regulations also propose minimum standards for pools, including Financial Conduct Authority (FCA) authorisation and the capacity to manage local investments.
The regulations were originally expected to take effect from 1 April 2026, subject to the passage of the Pension Schemes Bill through Parliament. The Bill is currently returning to the House of Commons for consideration of amendments made in the House of Lords.
In response to the consultation, the pensions industry raised concerns that the reforms could undermine fiduciary duty and local decision-making.
Pensions UK urged the government to exercise its powers in consultation with administering authorities and to avoid allowing statutory powers to override existing shareholder agreements.
The LGPS Scheme Advisory Board (SAB) echoed these concerns, warning that the regulations, as drafted, could allow the government to force pension funds into a pool even where existing members believe it would not be in beneficiaries’ best interests.
In light of consultation responses, the government now expects to make targeted changes to the regulations to ensure the policy aims are implemented “effectively and without undue risk”.
An MHCLG spokesperson said: “We consulted on how best to implement changes to the Local Government Pension Scheme, which plays a vital role in securing the retirement futures of millions of public sector workers.
“We expect to make some targeted changes to the proposed regulations to ensure the pooling and governance reforms are implemented as effectively as possible, and we’ll provide further detail in due course.”
MHCLG is expected to publish a response to the consultation “shortly”.
The Scheme Advisory Board said that changes to implementation timelines would provide welcome clarification for the sector.
“The Board has been calling for this clarity for some time, given the practical implications for implementation across the sector,” it said.
“While the revised timelines and clarifications are welcome, we recognise that funds and pools have had to plan and make decisions on the basis of the draft regulations and guidance, and that these updates therefore come late in the day for many who have already mobilised in response.”
Pooliong progress
Ahead of the 1 April deadline, remaining pools have completed integration of the orphaned ACCESS and Brunel partner funds.
Local Pensions Partnership has expanded to nine member funds and approximately £57bn in assets after Devon, Avon, Dorset, Somerset, Cornwall and the Environment Agency Pension Fund signed a memorandum of understanding in November.
LGPS Central has added six new partner funds: Gloucestershire, Hampshire, Norfolk, Oxfordshire, Suffolk and Wiltshire.
Border to Coast Pensions Partnership has confirmed seven new partner funds – Cambridgeshire, East Sussex, Essex, Hertfordshire, Kent, Northamptonshire and West Sussex – taking collective assets close to £120bn.
London CIV has added Buckinghamshire Pension Fund, bringing an additional £4.2bn and lifting total assets under management to around £55bn.
Border to Coast, LGPS Central, Local Pensions Partnership and London CIV are already regulated by the FCA. However, Northern LGPS and Wales Pension Partnership have yet to secure FCA authorisation.
