Local Government Pension Scheme (LGPS) funds and pools are “trying to fly planes as government is building it” as they work through the implications of the 'fit for the future' reforms, according to LPPI head of investment strategy, Max Townshend.

Speaking during a panel session at the Pensions UK Investment Conference 2026, Townshend said draft guidance around the reforms was acting less like guidance and more like “a mandate to do things”, leaving funds and pools navigating a significant period of uncertainty.

Townsend noted that the changes introduced new elements for funds, including clearer alignment between investment and funding strategy, the formal inclusion of risk appetite, and requirements around local investment objectives.

“We are slowly, slowly, slowly getting there,” he said, suggesting the reforms could ultimately give funds greater space to focus on long-term strategic issues rather than implementation detail.

Also emphasising the scale of the changes, Lincolnshire Pension Fund head, Jo Kempton, highlighted concerns around governance and accountability as responsibilities shifted further towards pools.

Kempton warned that while governance structures and relationships were important, performance would remain a key test of the pooling model.

“We can have the best governance structures in the world. We can have the best relationships in the world. But at the end of the day, if the performance isn’t there, and our committee are not able to sack the manager, how do we actually deal with that?” she said.

Kempton confirmed that funds and pools were already working on oversight frameworks, including annual reviews of investment sub-funds, which were discussed among officers and escalated to joint committees comprising the chairs of the underlying pension funds.

However, she stressed that transparency and open communication would be essential to ensure pension committees continued to feel engaged.

West Midlands Pension Fund director of investment strategy, Paul Nevin, also acknowledged the tensions created by the reforms, particularly around conflicts of interest, concerns over standardised investment approaches, and fears among committees about losing control.

“Nobody is conflict-free,” he claimed, arguing that pools advising on strategy while also implementing it inevitably created tensions that must be openly acknowledged and managed.

Nevin stressed that clear communication and strong reporting would therefore be essential, drawing on experience from fiduciary management in the private sector.

“In terms of communication, most important here is reporting - reporting, reporting, reporting,” he added, suggesting that better transparency could ultimately leave schemes feeling more in control.

London CIV chief commercial officer, Andrien Meyers, agreed on the importance of collaboration between pools and partner funds as the sector moved into the next stage of pooling.

“My one word would be collaboration,” he stated, arguing that the focus was now shifting from why pooling existed to how it operated in practice.

Myers revealed that London CIV had worked with partner funds to agree a core investment management agreement and a service-level framework setting out what each side should expect of the other.

He also highlighted increased reporting and regular attendance at partner fund committee meetings as key elements in maintaining transparency and trust.

Meanwhile, the panel discussed the growing emphasis on local investment under the new framework, with Townsend noting that funds would now be required to set out their local investment ambitions and targets in their investment strategy statements.

He suggested this could create new opportunities over the longer term, particularly in areas such as venture capital, infrastructure and real estate that supported regional growth.

However, Kempton cautioned that expectations must be carefully managed.

“The pension fund is not just a new form of capital to call upon,” she said, warning that LGPS assets cannot simply be used to meet local political priorities if doing so would undermine fiduciary duties.

Kempton stressed that funds must remain clear about their investment objectives and the potential impact on employer contribution rates.

The discussion also touched on responsible investment, with Myers acknowledging the challenge of balancing different partner fund policies within pooled structures.

He noted that London CIV had worked with partner funds over recent months to develop a responsible investment framework designed to accommodate different objectives while remaining practical to implement.

Despite the challenges, several speakers pushed back against the suggestion that relationships between funds and pools were becoming adversarial.

Townsend argued that the “P” in LPPI, which stood for partnership, was “not just there for the sake of it”, adding that pools were committed to supporting the funds they serve.

Kempton agreed, noting that Border to Coast aimed to operate as “19 partners” rather than “18 partner funds and the pool”.

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