Fit for the Future: Government finalises pooling rules
Author: Nick Reeve | Published: May 21, 2026
The government has extended several key deadlines for funds and pools within the Local Government Pension Scheme (LGPS) to comply with its Fit for the Future regulations.
The finalised rulebook was laid in parliament today (21 May) and will come into force at the end of June. It establishes a new framework for the pooling of LGPS assets following the decision last year to shut down two of the eight pools.
Following feedback from across the LGPS, the government has extended the deadline for pools to receive regulatory authorisation and revised the authorisations it expects them to achieve, as well as moving deadlines relating to the transfer of assets to the control of pools.
The six LGPS pools now have until 30 September next year to meet Financial Conduct Authority (FCA) requirements to qualify as a “full scope UK Alternative Investment Fund Manager” (AIFM). This follows feedback from LGPS funds and pools, warning that the previous timeline was too short given the substantial amount of work needed to achieve authorisation.
In its response to the final consultation, also published today, the government acknowledged that “the different starting positions of the asset pools mean [AIFM status] is not an achievable first step for all pools”.
The final rules also extend the deadline for LGPS funds to publish a new investment strategy reflecting the Fit for the Future changes, to 31 March 2027.
LGPS funds will now have three months – rather than 21 days – from joining a pool to transfer the management of all assets to the new pool. This must be done if “reasonably practicable”, which the government said allowed flexibility to extend the three-month period “where it would be poor investment management to transition an asset” faster than this.
In addition, the government said any LGPS funds participating in pools “solely for the purposes of winding up the pool” will be exempt from any limits on being a member of multiple pools until the winding up process is complete.
It also moved to clarify that participating in multiple pools was acceptable if funds were accessing specific strategies not available in their main pool. It specifically mentioned cross-pool collaborations such as GLIL, which is backed by funds in the Local Pensions Partnership and Northern pools.
The consultation response also clarified that the government does not expect pools or funds to be directly involved in the design of local investment projects. It plans to provide further guidance on this area in the near future.
The government said: “The intention of this policy is that administering authorities, either directly or via their asset pool companies, communicate with strategic authorities and provide feedback where a project is not a suitable investment for them. It is not the policy intention that pension funds and/or asset pool companies become directly involved in the design of projects themselves.”
If there is no relevant strategic authority for an LGPS fund or pool to work with, the government said they should seek to engage with local authorities instead.
LGPS funds and pools have been stepping up their local investment efforts in recent months. In September last year, the pools backed a report from impact advisory firm The Good Economy outlining how to mobilise local investing across the country.
Another deadline extension has been applied to the requirement for funds to appoint a “senior LGPS officer”. This was initially set at 1 October 2026, but will now be six months from when the rules come into force – effectively meaning funds have until the end of this year to make their appointments.
The senior LGPS officer will have overall responsibility for the management and administration of the fund, according to government documents. An individual can fulfil the role for more than one fund if those funds share services, the government said.
Funds must also appoint an “independent person” to support their pensions committee as an adviser. The appointment process will be clarified in separate future guidance, the government said, but the same deadline applies for this appointment as for the senior LGPS officer.
If funds are significantly late in filling either of these roles, they may face action from the Pensions Regulator.
This article first appeared on our sister publication Pensions Expert.
