Speaking at an industry conference this week, Roger Phillips, chair of the LGPS Scheme Advisory Board for England and Wales, said the government was “very interested in us” – which he warned presented a challenge to the system’s existence.
“But we need to keep doing our day job, as we do it well,” Phillips said.
“It’s about your cooks, your cleaners, and your classroom assistants who will have a pension well below £10,000 a year – not a substantive amount above the state pension.”
Roger Phillips, LGPS Scheme Advisory Board
“We are the sixth largest scheme in the world and both this government and the previous one have felt that we didn’t punch our weight,” he continued. “But the LGPS is providing pensions for some of the lowest paid people in the public sector.”
“It’s about your cooks, your cleaners, and your classroom assistants who will have a pension well below £10,000 a year – not a substantive amount above the state pension.”
A long to-do list
Phillips acknowledged that the LGPS was facing a long to-do list, including the scheme’s triennial valuation process, ongoing work on the McCloud remedy, and preparation for connection to the pensions dashboards system.
“If that wasn’t complicated enough we’ve had Fit for the Future, and we also have local government reform,” Phillips continued. “So there is a hell of a lot that’s going on, and you still have to do the day job.
“And my message to you is that, yes, politicians and government want us to do things but, at the end of the day, how many complaints do we get from our pensioners? That says something about the quality of administration [and] governance.
“Of course, be mindful of the impact that if we don’t look after it wisely, the impact that has on employers and indirectly, council taxpayers as well.”
“There has been a lot of stress. I see my administration team working overtime just trying to keep on top of everything that’s going on.”
Peter Wallach, Merseyside Pension Fund
Peter Wallach, director of pensions at Merseyside Pension Fund, said the pooling deadline of 31 March 2026 also remained a serious challenge.
“There has been a lot of stress. I see my administration team working overtime just trying to keep on top of everything that’s going on,” he said.
Meeting the pooling deadline was particularly challenging for the three funds in the Northern LGPS pool, Wallach added, as they have “bit further to go than some of the other funds in terms of FCA authorisation”. The Merseyside, West Yorkshire and Greater Manchester LGPS funds must establish an asset management company for their pool by 31 March 2026 to comply with the government’s demands.
“It is a huge amount for us to get to grips with, along with the actuarial valuation,” Wallach said.
LGPS is ‘not here to shore up the UK economy’
Laura Colliss, pension fund manager at the North East Scotland Pension Fund, said she hoped that UK investment would not be mandated.
She said: “The LGPS is not here to shore up the UK’s economy. It’s here to pay pensions – and, as Roger [Phillips] mentioned, very low-paid members’ pensions, which they absolutely wholly rely on. That’s our prime objective.”
Phillips also expressed concern that the government’s plans to mandate UK private asset investment could place strain on relationships between employers and employee representatives.
He said: “We have worked tirelessly to bring employer and employee representatives together so that we work as one in the best interest of the LGPS. If ever there’s a divergence of views on that, it will take us into new territory.”
Jo Donnelly, chief executive officer at the London Pensions Fund Authority, noted the LGPS was not immediately part of plans to mandate investment in UK assets. She said this was “a really healthy reflection of government listening and understanding that we are heavily invested in the UK already”.
LGPS assets up by 10%
Phillips also presented the main findings of the LGPS’s scheme-wide annual report for the 12 months ending 31 March 2024.
Assets increased by 10.1% to £390bn, while the return on investment was 8.9% over the period.
Total membership increased by 2.8 % to 6.68 million members. Of those, 2.15 million were active members, 2.4 million were deferred and 2.14 million were pensioners.
However, administration and governance costs rose by 5.7%, while investment management fees increased by £49.6m.
Phillips warned that the government was watching overall costs and would want to understand why figures were rising.
“While you can talk about the percentage of the overall investment, there is a focused interest on that figure,” he said.
