LGPS Reform: hope at last for 2026

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Anonymous author!

In this edition of the Devil’s Den, our secret columnist welcomes new LGPS governance regulations but warns real change requires teeth, not tokenism

“At last”, that was my reaction to the start of the consultation on the new LGPS Governance regulations. The Scheme Advisory Board’s Good Governance review concluded in 2021 and whilst government endorsed the principles soon afterwards, the regulations to put it into practice have taken far too long.

Governance concerns

I do wonder whether the changes will be resisted because many in our industry think the LGPS is well-managed and they may be wondering why we need to change. Having worked in the LGPS for most of my career, alongside numerous funds, I am aware of very different standards. The funds that are run well, in my view, are typically managed by officers who are strategic thinkers, are intellectually capable and most importantly, have the soft skills to manage their pensions committee and other stakeholders.

However, there are far too many who are not and I have seen far too many examples of poor governance in the LGPS over the years. Here’s a bucket of iced water for those thinking all is rosy in the garden, all these are real and unfortunately not unusual…

  • Committee members chosen by their political group, often the last person to “step back” with no recognition of the need for skills/knowledge/continuity, let alone the question of why a pensions committee needs to be politically balanced. An authority who had to cede the chair of one committee to the opposition party – no prizes for guessing which one was chosen!
  • The Pensions Committee isn’t recognised by the council as being of important enough to warrant additional remuneration for the chair.
  • Despite requirements set out in training policies, some members not attempting to improve knowledge, and no resulting consequences. Despite training policies, knowledge levels and competence can be shockingly bad – a committee member for over 10 years scored 50% on a very basic knowledge test.
  • I’ve lost count of the number of times conflicts come into play and are not managed appropriately, primarily relating to contribution rate for the host council, costs allocated to the pension fund on an unfair basis.
  • Excessive hospitality enjoyed by both officers and committee members. It has been good to see this reducing in recent years somewhat due to investment pooling, at least in England and Wales.

LGPS Senior Officer

The new requirement for an LGPS senior officer should be the key to ensuring a better governed LGPS in the future, particularly because the new regulations are more stringent than the Good Governance review. In my view, the SAB’s review mistakenly left open the question of whether the LGPS senior officer could be the section 151 officer to appease smaller funds who typically do not have someone senior enough managing all fund matters. I’m glad the regulations are separating the roles.

Laudably, some funds have made resource changes on the back of the Good Governance review. However, the title crucially needs to come with the requisite seniority, influence, and accountability. Take Surrey Pension Fund as an example, their annual report lists Neil Mason (their “LGPS senior officer”) as third in officer seniority, however their accounts do not contain any statement signed by Neil. Their Governance Policy Statement says “Responsibility… resides with the deputy chief executive and executive director of resources.” In my view, this is paying lip service to the “LGPS senior officer”.

What next?

The regulations are welcome, but the accompanying guidance will be crucial. The LGPS senior officer must have teeth, and the authority to bite if needed! This could be a real challenge for smaller funds/administering authorities, for example the London boroughs.

The recent news from Surrey Council of the establishment of a single purpose authority for the Surrey Pension Fund should be a milestone for the LGPS. I hope that they get the right balance between political accountability and professional decision making. I would make knowledge and skills are a pre-requisite for decision makers and ensure appropriate remuneration with accountability. I would also embed non-councillors (employer and member representatives) and pension professionals in the governance framework (akin to the London Pensions Funds Authority model rather than that of South Yorkshire Pensions Authority).

The Pensions Schemes Bill is giving the same powers to legislate to Scottish ministers. Leaving aside the fund structural debate which has been kicked into the long grass for far too long (that’s for another article!), I hope the opportunity to advance governance north of the border is also grasped, and quickly.

So there’s lots of hope for 2026 and the coming years for the LGPS, provided the new regulations and guidance are adopted and enforced with genuine interests of the members and employers at the forefront.

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