Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Whatever Brexit we get, the LGPS will press on

  • Comment

Several years into the pooling experiment, the Local Government Pension Scheme (LGPS) is no stranger to upheaval, nor the political and practical disputes that go along with it.

The experience has been tough for some, and it was wise that the government allowed enough flexibility for different models to emerge reflecting different approaches and circumstances. As we have previously reported, Scottish funds may also go another way entirely and consolidate through mergers or looser co-operation.

Two consultations that have emerged in 2019 reflect ministers’ desire to press on – albeit incrementally. The government is keen that assets be moved from funds into their respective pools, as indicated in its statutory guidance on asset pooling, which also clarifies relations between funds and pools.

In parallel, the Scheme Advisory Board for England and Wales has begun a governance consultation to assess how the interests of different employers are taken account of. It is more conservative than the ‘separation project’ of 2015, but could still lead to more funds being administered by a joint committee featuring several authorities, rather than a lead authority as is normal.

What ties the two is a desire for progress without revolution. As Jeff Houston, secretary to the Scheme Advisory Board, told me, appetite for “radical change” after pooling is likely to be small.

Unfortunately for the sector, not all radical change can be avoided. As for most sectors in the UK, the biggest ‘known unknown’ is the country’s exit from the EU. One question is whether this will proceed with a deal or not. Another question is whether it will happen at all.

The coinciding of the Brexit deadline of 29 March with the LGPS triennial valuations two days later is a complicating factor. The potential shifts in asset and currency values that could accompany the UK’s exit could have an impact on liabilities, investment strategy, and the legal position.

While this will cause headaches in the sector, it at least has the recent experience of coping with radical change in pooling. Some will harken back further to the fallout from the financial crash a decade ago, an anniversary prompting some rethinking on asset allocations.

For the LGPS, the year looks likely to be one of pragmatic reform and strategic repositioning, whatever emerges when the known unknown reveals itself.

Jimmy Nicholls, features editor


  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.