The final publication of the Pensions Schemes Bill has left many industry players underwhelmed and even disappointed.
“We still very much support the government’s intent, but the LGPS content in the Pension Schemes Bill feels lacking,” said Iain Campbell, head of LGPS investment at consultancy Hymans Robertson.
“We’re disappointed not to see more of the detail that supports implementation, and the goals for local investment,” added Campbell. “It appears that the detail the LGPS urgently needs, given the short timescales for implementation, will be set out in the guidance to follow, so we hope that’s imminent.”
Zoe Alexander, director of policy and advocacy at the PLSA, noted how the Bill includes a “broad reserve power” to enable the government to direct how pension money is invested.
“We believe that the best way of ensuring good returns for members is for investments to be undertaken on a voluntary, not a mandatory basis,” she said. “We also note powers being taken to specify required investment capability for schemes, and to direct LGPS funds to merge with specific pools. All of these powers will require careful scrutiny.”
Damon Hopkins, head of DC workplace savings at consultancy Broadstone highlighted a conflict in the government’s plans to use pensions for wider economic investment benefit.
“There continues to be a potential conflict, particularly if mandated, between a pension scheme’s fiduciary responsibility to maximise savers’ retirement outcomes, that is, investing in assets with optimal risk/return profiles and the advantages to the UK economy,” he said.
“While billions of pounds of investment into the UK economy will have obvious advantages, UK pension savers are inherently exposed to risks in the UK economy in their day-day lives so increasing this risk may not be optimal, nor is it guaranteed that the returns yielded will be better than those on offer globally,” Hopkins added.
In a similar way, Claire Brinn, senior UK policy manager at responsible investor campaigning group Share Action, added: “The Pension Schemes Bill is a defining moment in pensions policy and shaping the future for UK pensions savers, however as it stands it is a missed opportunity to clarify fiduciary duty.”
Lou Davey, head of policy and external affairs at the governance group IGG, raised an interesting point about the government’s megafunds idea. “It remains to be seen whether size is the only barrier to greater investment in illiquid assets, or whether additional government clarification and support is needed,” she said.
It does mean there is a significant amount of work for LGPS officers and committees to do to ensure they are ready for implementation.
“This is particularly important when thinking about all the work that it will take to be ready for the March 2026 pooling deadline,” added Campbell.
But David Saunders, senior partner at pensions law firm Sackers, offered another perspective, noting the Bill still has to become law.
“A bill’s passage through Parliament is a long and winding road, and there could be several twists and turns along the way,” he said. “With detailed regulations to follow in many cases, there is therefore still a lot of ground to cover before the Bill’s provisions reach their ultimate destination as law.”
Comments