Local Government Pension Scheme (LGPS) funds must engage early with their Pools to agree on core principles and expectations ahead of changes outlined in the Pensions Schemes Bill, Hymans Robertson has said, warning that failing to do so could limit their influence over future investment decisions.

Under the new Bill, pools will take on expanded roles, including advisory functions, meaning many strategic investment decisions may migrate from administering authorities to the pooling entities.

However, the government’s current pooling template covers only nine asset classes, and Hymans cautioned that this narrow framework could restrict options unless funds establish strong foundations for partnership.

Hymans Robertson CIO, David Walker, stressed that this was a “vitally important” time for LGPS funds.

“We know that the Bill is bringing significant change to the pensions landscape as a whole, but for the LGPS in particular, how changes are developed in this initial phase will have a far-reaching impact.

“Any missteps could result in investment outcomes being negatively impacted in the longer term,” he warned.

Walker emphasised that with the March 2026 pooling deadline approaching, funds must align their own goals with what pools can realistically deliver and ensure they retain a say
over non-pooled assets.

“Talking through the basics now will help funds to maintain oversight and fulfil their governance obligations,” he argued.

“While part of the new rules mean that funds will need to take principal investment strategy advice from their pool, they are still responsible for their own individual investment strategies, which consider asset allocation, responsible investment approach,
and local investment priorities - all of which are linked to fiduciary duty,” Walker added.

The comments come amid growing concern over the speed and complexity of the pooling transition.

The government has reaffirmed that all LGPS assets must be pooled by March 2026, with backstop powers allowing intervention in individual authorities if required.

However, some in the industry have warned that the deadline may prove “overly ambitious” and could force suboptimal decisions if funds do not actively engage now.

Echoing this, Pensions UK has stated that "time and patience" are necessary to allow reforms to take effect, suggesting that particular patience is required for UK pension schemes to invest in alternatives in the same manner as Canadian schemes.

In recent months, several funds have announced new pooling arrangements, including Hampshire, Isle of Wight, Norfolk and Suffolk, which have opted to join LGPS Central after reviewing alternatives following the government’s ‘Fit for the Future’ criteria.

The most recent of these was the Devon County Council Pension Fund, which confirmed it would join the Local Pension Partnership Investments (LPPI) as a shareholder and client.

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