The government’s potential introduction of a power to force Local Government Pension Scheme (LGPS) funds into specific pools took some in the system by surprise, according to one fund’s chief executive.
Speaking at an industry conference yesterday (17 June), Jo Donnelly, chief executive of the London Pensions Fund Authority (LPFA), told delegates government plans to direct funds to specific pools “was a bit of surprise for some of us”.
She said plans to direct funds to merge were less of a surprise but seeing the government taking powers that they have not taken previously was an “interesting step”.
The government has introduced a power in the Pension Schemes Bill that – if enacted – would allow it to force an LGPS fund to join a specific pool. It could also gain the power to forcibly merge funds.
Pensions minister Torsten Bell has said the power is only intended to ensure that no fund is left without a pooling partner after the 31 March 2026 pooling deadline. However, industry experts have warned that the power could significantly alter the relationship between central and local government.
LPFA’s Donnelly said yesterday: “There were an awful lot of people against an awful lot of the proposals. However, that’s made no difference, and they’ve [government] gone ahead with them anyway.”
Despite this, Donnelly said there were positives to come out of the consultation, including in relation to the transfer of assets to pool management, from individual LGPS funds.
“The government is aware that it’s probably a good thing to try and avoid some of the costs of moving legacy assets, in particular, until that point in time when that does make sense,” she said.
Governance proposals welcomed
The government has also set out planned governance changes for the LGPS, as part of the ‘Fit for the Future’ consultation response.
Donnelly highlighted that the requirement to appoint an LGPS senior officer was a positive step.
She explained: “Hopefully, it will assist with some of those conflicts of interest that arise, particularly for those funds that are obviously council administering authorities where the section 151 officer is responsible for the delivery of statutory services as well as the pension fund.”
The introduction of a triennial independent governance review had also shown the government was prepared to listen, Donnelly added. It had initially proposed doing this every two years, but acknowledged this was “way too ambitious”, she said.
Additional reporting by Nick Reeve
