PLSA LA Conference: Govt to consult on LGPS pooling framework changes in autumn

The government is planning to launch a consultation on changes to Local Government Pension Scheme (LGPS) pooling regulations in autumn 2022, Department for Levelling Up, Housing and Communities head of local government pensions, Theresa Clay, has announced.

Addressing delegates at the PLSA Local Authority (LA) Conference, Clay stated that the existing framework is “no longer fit for purpose” and the government is therefore looking to consult on strengthening it.

Some of the proposals that are expected to be in the consultation include requiring investment pools to ‘have a plan’ to invest up to 5 per cent of assets to support the government’s ‘levelling up’ plans, requirements on the management and reporting of climate risks, and accelerated progress on transition to asset pools.

It is also expected to include proposals for strengthened requirements on training and expertise, greater transparency in annual reports, new scheme-level reporting, and setting a direction for greater scale and collaboration.

“We want to continue to see lower costs and better performance in this new context, and I do recognise what a big ask that is,” Clay stated.

“That’s a very big agenda, and you are facing substantial pressures, and for many funds that is going to be very challenging.

“Going beyond that, I think there is a wider ambition to keep up with private pension schemes and to ensure that the LGPS fully punches its weight.

“I think we’d agree that the LGPS does not have the real weight and influence that its scale should give it.

"To do that, it would need a much stronger presence and I think some of the proposals are intended to ensure that we have a much clearer public stance on what the LGPS is collectively achieving.

“We are planning to consult in autumn 2022. Final decisions have yet to be taken about whether we will consult on this all in one go.

“I want to thank everyone who has engaged with us so far as we think about these proposals and in particular to the Scheme Advisory Board."

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