"Time and patience" are needed to allow Local Government Pension Scheme (LGPS) reforms to bed in, Pensions UK has said, suggesting that particular patience is needed for UK pension schemes to invest in alternatives in the same way that Canadian schemes do.

Pensions UK's report analysed the government’s continued interest in adopting elements of the Canadian pension model, known as the “Maple 8”, within the LGPS, noting that, while the two systems are increasingly compared, they are not the same.

"Their scale, maturity and context differ significantly," Pensions UK deputy director of policy and advocacy, Joe Dabrowski, said.

Indeed, Pensions UK's report pointed out that the Maple 8 collectively manage over £1.1trn across just eight funds, compared to the LGPS’s £390bn spread over 86 funds within eight, soon to be six, pools. 

The report also emphasised that, in addition to scale differences, the Canadian model evolved over decades, with outcomes dependent on maintaining independence, building in-house expertise, and allowing time for strategies to mature.  

"There is clearly value in assessing international best practice and understanding what aspects of the Canadian model work well," the report stated.

"But the current relative sizes of the LGPS and Maple 8 needs to be considered, as well as the need for time to move to different configurations."

In particular, Pensions UK said that "more time and patience" is needed to allow further, significant developments in alternative investments in a similar fashion to the gradual and incremental approach taken in Canada.

"As we enter a big phase of local government pensions reform in the UK, what matters is giving it time to bed in, while carefully considering the strengths and differences between the two models," Dabrowski added.

“If the UK is to take inspiration from Canada, it should be by recognising the strengths and differences of each system, and building on what already works here, whilst keeping members’ interests at the heart of any changes.” 

Given this, Pensions UK said that it supports a structured and measured approach to reform, recognising the UK’s unique context while adopting valuable lessons from the Canadian experience, all while ensuring the interests of scheme members remain at the forefront. 

"Measures to progress pooling are bringing the LGPS closer to the Canadian model and patience is needed to see these developments take effect," it said.

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