The LGPS: looking back, moving forward

2025 - what a year that was!

It has been incredibly busy in the LGPS, particularly in England and Wales, with the triennial valuations; pooling and investment proposals, four consultations at the last count (Access and Fairness, Access and Protections, Fit for the Future proposals, and Fit for the Future draft Regulations); not to mention the Pension Schemes Bill, McCloud, connection to the Dashboard infrastructure - the list goes on! 

But is 2026 going to be any easier? In this blog we reflect on the past twelve months and consider the challenges and opportunities for the year ahead.

Fit for the Future

2025 has been dominated by the Fit for the future proposals to:

• accelerate and increase asset pooling; 
• set local investment objectives; and 
• implement the good governance recommendations. 

All eight asset pools were required to submit plans by 1 March and the proposals submitted by ACCESS and Brunel pools were rejected by the Government in April. Funds were then set a really challenging deadline of 30 September to make initial decisions on which pool to join from 1 April 2026. 

Simultaneously, the first phase of the pensions review is underway, with a full chapter of the Pension Schemes Bill (PSB) dedicated to the LGPS. 

The Fit for the Future consultation response was published in late May. Regulations to implement the proposals were published in November, with a six-week technical consultation period which ends on 2 January 2026. Much of the detail will be contained in statutory guidance, a draft of which was circulated to administering authorities on 8 December, with responses requested by 12 January. Not only is this arguably a very short period for such important guidance but it means there is no let up for administering authorities in the run up to the end of 2025. 

Whilst the investment proposals have generally had a lot more airtime, Fit for the Future introduces some very important governance changes, not least knowledge and understanding requirements for committees, regular and ad hoc independent governance reviews, and requirements to appoint a Senior LGPS Officer and an independent person to advise the committee.

Also, the proposed amendment to the Public Service Pensions Act 2013 (in the PSB) makes it clear the Secretary of State can direct a merger of funds if, in the words of the consultation response “local decision making is not effective in bringing about satisfactory arrangements”.  

Consultation, consultation, consultation

Other consultations published during the year include:

• Access and Fairness (15 May 2025 to 7 August 2025)
• Scheme Improvements (Access and Protections) Consultation (13 October 2025 to 22 December 2025)
• The Pensions Regulator’s (TPR) consultation on its Enforcement Strategy (16 September to 11 November 2025.

Whilst many of the proposals will be welcomed in principle, for example those to address long-standing discrimination on survivor pensions and the 75-year age limit on death grants, administrators will not relish the additional time and work required to backdate some of the changes.  

In addition, whilst the New Fair Deal proposals may be well intentioned, for example by removing the admission body route to protect members from service breaks when admissions are not properly completed, these are likely to create complications. In particular, the proposal to treat outsourced staff as remaining with the letting authority (‘Fair Deal Employer’) for LGPS purposes raises practical and administrative challenges.

What else is happening?

Local Government Reorganisation and Devolution

We published a blog on the potential pensions implications and pitfalls of LGR and Devolution on 19 March 2025. Final LGR proposals in many areas had to be submitted by 28 November, and funds have been considering if and how potential changes should be reflected in the 2025 valuations. 

Funding Strategy Statements (FSS)

If finalising a valuation is not enough, funds have had to prepare a revised FSS in line with new guidance – this has added another job which funds have managed to weave into their valuation work.

Ongoing projects

And let’s not forget the ongoing projects such as ensuring you are dashboard ready. We know there are still challenges around AVCs, connecting to the ecosystem and implementing the McCloud remedy. It’s unlikely that funds will be offered another opportunity to issue annual benefit statements without McCloud data in 2026.

Looking ahead to 2026: a year of continued change

Valuations, pooling and structural change

The valuation work will be completed by 31 March 2026. While McCloud is still likely to be hanging (like a black cloud?) over funds, our crystal ball suggests that the Fit for the Future investment and pooling changes will continue to take up a lot of time. 

As well as investment implications, documentation and structural changes will be required to accommodate new partner funds for many pools as well as incorporating the new arrangements for ACCESS and Brunel funds. 

A step up in Governance

Funds will also need to address the new governance requirements, most of which are expected to come into effect from 1 April 2026 and be ready for new independent governance reviews. Appointing a Senior LGPS Officer with no material responsibilities other than the pension fund may prove challenging for some. 

Environmental, social and governance (ESG) factors will likely continue to be high on the agenda, alongside investment strategy reviews following the 2025 valuations. Many funds will also continue discussions on local government reorganisation (LGR), and we expect greater activity from TPR, with a public service pensions scheme survey expected in the new year and increased focus on governance of administration.  

Administration pressures continue

There will be no let up for administrators either. They face the Access and Fairness changes, planned re-introduction of councillor eligibility in England and new Fair Deal changes (assuming these are finalised). It’s not yet clear whether many multi-academy trusts will seek to consolidate their LGPS interests (there were a few waiting the Oasis decision) and the impact of the 2025 valuation results remains to be seen.

Mergers aren’t out of the question 

The Government has said it has no plans to force fund mergers, but that’s not to say voluntary mergers would not be welcomed. We’re not suggesting we expect any fund mergers in 2026, but we wouldn’t rule out discussions, particularly where LGR or devolution might naturally steer funds in that direction.  As always, any structural change should have scheme members at its heart, and we hope any future changes are for the right reasons.

If you’d like any help navigating 2026 and beyond, please contact your usual Barnett Waddingham contact or alternatively, get in touch with the  governance team at LGPSGovernance@barnett-waddingham.co,uk.