The Society of Pension Professionals (SPP) has raised concerns about potential unintended consequences within the government’s technical consultation on the Local Government Pension Scheme (LGPS), while welcoming some movement from earlier proposals.

The latest Fit For The Future consultation, which follows the government's previous policy consultation last year, sets out detailed regulatory changes intended to strengthen governance, accelerate asset pooling and clarify the respective roles of administering authorities and LGPS asset pools in England and Wales.

In its response, the SPP acknowledged that the revised regulations provide a “basic framework” for aligning funding and investment strategies, but warned that they still lack sufficient clarity on how administering authorities (AA) should balance return objectives, contribution stability and local economic priorities.

For example, the professional body said Regulation 11(2), which links investment strategy financial objectives to funding strategy statements, is reasonable in principle, reflecting the established collaboration between fund actuaries, investment advisers and LGPS funds.

However, it argued that the regulations do not explain how funds are expected to reconcile contribution stability with return characteristics alongside the obligation to consider local economic priorities.

“This question is at the heart of fiduciary duty as applicable to LGPS funds,” the SPP said, calling on the government to provide more explicit guidance on what constitutes a reasonable compromise between competing regulatory objectives.

The SPP also described the proposed deadline of 30 September 2026 for publishing investment strategies as “challenging but achievable”, provided that detailed requirements are confirmed in good time and align with existing governance and valuation cycles.

While the body supported linking the three-yearly review of investment strategy to the triennial actuarial valuation, it warned against a 'set and forget' approach.

It stressed that investment strategies should be subject to continuous monitoring and, where necessary, revision in response to market conditions, employer circumstances and evolving responsible investment considerations.

In addition, it raised concerns over draft provisions restricting administering authorities to participation in a single asset pool.

While acknowledging the aim of administrative simplicity, it cautioned that this could limit access to specialist or innovative investment strategies unless inter-pool collaboration is explicitly permitted.

The consultation response also highlighted ambiguity around the use of 'exceptional circumstances' when seeking supplementary independent investment advice, arguing that the term should be more clearly defined to avoid discouraging reasonable use of external expertise.

On governance, the SPP welcomed proposed enhancements but said they risked appearing “light-touch” compared with trust-based pension arrangements.

With this in mind, it recommended empowering the Scheme Advisory Board to set baseline governance standards and called for clearer enforcement mechanisms to avoid inconsistent implementation across LGPS funds.

The response concluded by urging the government to ensure that mandatory pooling reforms retain sufficient flexibility for large and complex schemes, particularly where bespoke investment solutions are required.

The technical consultation closed on 2 January 2026, with final regulations expected to follow ahead of implementation timelines linked to the 2025 LGPS actuarial valuation cycle.

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