Pension professionals support encouraging Local Government Pension Scheme (LGPS) funds to invest locally, but only where this does not compromise member returns, according to polling from the Society of Pension Professionals (SPP).

The polling, carried out during an SPP webinar on key developments in LGPS funding and governance, found that 59 per cent of respondents supported the government’s proposed obligation for all LGPS funds to have a high-level objective on local investments, if there is no impact on investment returns.

A further 19 per cent said they supported the proposal regardless of the impact on returns, meaning 78 per cent of respondents expressed support in principle.

However, almost a quarter (22 per cent) raised concerns about the plans.

This included 10 per cent who said the definition of 'local' was too narrow and should instead include UK-wide investments, while 12 per cent said investment decisions should continue to be based solely on risk, return and environmental, social and governance (ESG) considerations.

The SPP said the findings suggested that, while the pensions industry is open to supporting local investment initiatives, protecting members’ financial outcomes remains the overriding priority.

The event also explored proposed governance changes, including the potential challenges of attracting professional trustees to act as “independent persons” supporting LGPS pension committees.

Polling found that 39 per cent of respondents believed remuneration may not adequately reflect the role's responsibilities and complexity.

A further 34 per cent pointed to uncertainty around how the proposed independent person role would differ from that of a traditional professional trustee.

Meanwhile, 27 per cent cited potential legal and reputational risks associated with advising committees without having full decision-making authority.

The SPP claimed that the findings indicated interest in strengthening LGPS governance through greater independent expertise, but suggested that clarity around the role and appropriate remuneration will be important to attracting experienced professionals.

SPP Public Sector Committee deputy chair, Tim Domanski, commented: “This SPP polling demonstrates that pension professionals recognise the value of encouraging investment that benefits local communities, but not at the expense of members’ returns.

“Equally, proposals to strengthen governance through independent expertise are welcome, but the role must be clearly defined and appropriately recognised if it is to attract experienced professionals.”

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