Let’s be clear the role of local authorities in the Local Government Pension Scheme

The Local Government Pension Scheme (LGPS) is a nationwide scheme but is administered by local authorities.

The scheme is for local government employees and people employed by other non-profit organisations who are carrying out a service which was, or could be, carried out by the local authority.

The LGPS does not include teachers, firefighters or police officers because these specific jobs have their own pension schemes.

What is different about LGPS is that it is funded and pensions are paid from money invested for future payments. But there has been a longstanding battle between those who would the fund to pay the pensions to be run as one pool and those at the other extreme who want the pensions administered locally by local authorities to be invested locally with local authorities having some say over the direction of the investments.

The FT has got hold of an email that makes this argument even more political than we might have thought.

Ministers have blocked local authority pension funds in England and Wales from joining a single vehicle to manage their assets, citing the risk of capacity constraints, despite previously touting the benefits of scale.

Government officials told the 21 heads of local authority pension schemes in July they were “unable to rule out ministerial intervention” in the event that all the funds opted to join the same pool, in an email seen by the Financial Times.

The 21 authorities are the ones that have to find a new pool to invest in having previously invested in two pools being disbanded (more on this in a moment).

The idea that a single vehicle (pool) to manage assets for everyone has long been the aim of some parts of the LGPS set-up, indeed Edi Truell when he set up a London Common Investment Pool saw it as something that could grow into a single pool. It was a stated aim from the Conservative party as early as 2015 but it is clearly not what the Ministry with responsibility for the running of LGPS agree with.

“Given the capacity constraints for existing pools, it will likely not be possible for a single pool to take on all 21 authorities,” said the email from the Ministry of Housing, Communities and Local Government. “Authorities should also take the interaction with local government reorganisation and devolution into account.”

September 30th 2025 (now gone) was the final day for funds invested in the two pools that are being taken down to make clear where they would invest in future. Some local funds don’t use the pool as much as others and there is pressure on them to conform and consolidate rather than make decisions of their own. The thinking was that Access and Brunel were not doing their jobs as pools, some called them little more than fund supermarkets for Local Government authorities to go shopping.

There is clearly an ongoing contention between those who see pooling as the way to maximise the efficiency of the Local Government Pension Scheme and those who see LGPS as a source of funding for local projects (yesterday we discussed the financing of New Towns) around England and Wales).

There has been considerable complaint that the process of winding up two pools has been over-hasty for the 21 authorities. The Pension Minister has been anything but sympathetic to this argument complaining that closure was all too slow.  What we are seeing from a leaked e-mail is a counter argument from within parliament and the civil service ensuring some autonomy of investment locally. This has clearly got a way to go.

The 30th September deadline is now past; was it the beginning of the end for multiple pools or the end of contraction of the number of pools? That email will no doubt be referred to again!