The West Midlands Pension Fund (WMPF) and the South Yorkshire Pensions Authority (SYPF) have both earmarked up to 5% each of their total assets to local investments, as both local authority pension funds update their respective investment strategy statements.
WMPF has announced plans to allocate up to £1.1bn (€1.3bn) to projects linked to the regional economy over the next six to eight years, part of a broader strategy to support place-based investment while maintaining fiduciary standards, the fund announced.
The target allocation, representing around 3–5% of the fund’s assets under management, will be deployed on a phased basis and contingent on opportunities meeting the fund’s risk, return and governance requirements.
Rachel Brothwood, head of pensions at the fund, said all investments will be assessed against the same criteria applied across the wider portfolio.
“This is a clear, long-term target for local investment as part of our investment strategy statement. It is grounded in fiduciary duty and informed by advice and evidence,” she said.
“Every opportunity will be assessed against the same standards we apply across the whole portfolio, including risk, return, due diligence, and governance,” she added.
Local investment activity is expected to focus primarily on private markets, including housing and real estate, infrastructure, and financing for businesses. The fund will retain flexibility to pursue opportunities as they arise and as market conditions evolve.
The initiative is being developed in collaboration with the West Midlands Combined Authority (WMCA), which will help shape a pipeline of investable projects aligned with regional growth priorities.
Implementation will be carried out through the fund’s pooling partner, LGPS Central, which will conduct due diligence, execute investments, and provide ongoing reporting. The fund will maintain oversight of performance and delivery against both financial and place-based objectives, it added.
The geographic focus will primarily be the WMCA area, although the fund said it may also consider opportunities beyond the region where there is a clear economic, social, or environmental link.
WMPF emphasised that local investment will not come at the expense of portfolio diversification and must compete on merit with comparable assets elsewhere.
WMPF’s announcement follows a similar approach adopted earlier this year by SYPA, which updated its investment strategy to allocate up to 5% of assets to local impact opportunities.
At least half of SYPA’s target is to be invested directly within South Yorkshire, with the remainder supporting initiatives that deliver clear regional economic or social benefits.
Priority sectors include residential development, local lending, and support for small and medium-sized enterprises, aligning with the strategic ambitions of the South Yorkshire Mayoral Combined Authority.
Like WMPF, SYPA emphasised that local projects must meet the same investment criteria as other assets in the portfolio, highlighting fiduciary oversight alongside the pursuit of regional impact.
SYPA’s chair, councillor Donna Sutton, said: “This revised strategy ensures the fund remains resilient in the face of evolving market conditions, while reinforcing our leadership in responsible and place-based investment.”
She added: “It reflects careful consideration, robust challenge and a clear focus on delivering long-term value for our members and South Yorkshire. We now look forward to working with our pool manager, Border to Coast [Pensions Partnership], to implement our strategy.”
Both moves underline a broader trend within UK local government pension schemes (LGPS) towards place-based investment, as funds seek to balance long-term returns with economic and social outcomes in their regions, while staying within the parameters of fiduciary duty.
