The industry-recognised LGPS Investment Survey returns at a time of significant political upheaval following the publication of the Fit for Future Consultation.
The survey gives stakeholders the opportunity to provide their views on LGPS governance, investment trends and sector sentiment.
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Click here to take part in the survey
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This year’s survey coincides with the government’s Pension Bill and aims to contribute to the ongoing debate about the future of the LGPS. It focuses on:
- the future of the LGPS,
- trends within asset allocation and cashflow management,
- levelling up and local investment,
- private market strategies,
- how to tackle climate change.
Paul Myles, director Private Assets at Schroders and Head of LGPS said: “The LGPS England and Wales are facing many challenges, while having to implement new pooling guidelines and mandatory consolidation, potentially within unrealistic timeframes and during a valuation year.”
Reforms ahead
The survey will provide a vital snapshot of current sentiment within the scheme. Do LGPS investors approve or disapprove of the push to invest more in UK assets? How do they feel about the mandated pool consolidation and the new powers introduced as part of the Pensions Bill?
Reforms aside, many LGPS funds and pools are considering changes to asset allocations. Last year’s survey highlighted a shift towards private markets with renewable infrastructure and direct lending attracting significant LGPS capital.
Inflation has come down but remains well above the 2% target while the UK Government faces its highest borrowing costs in 27 years*. Those funds that are cash flow negative are challenged to capture inflation linked distributions without increasing overall risk. Will the trend towards private markets persist?
The Government has indicated that more pension fund capital should be invested in UK assets, including Venture Capital. Could this bring additional risks into LGPS and potentially limit returns compared to a global investment universe?
The Fit for Future Consultation requires a number of potentially radical changes – a greater proportion of assets be managed in-house. Pools are now responsible for Strategic Asset Allocations (SAA)- are they being asked to take on too much too quickly?
Last year’s survey suggested local investment idea generation was best served in collaboration between fund and pool. The current emphasis is now on funds sourcing investment ideas and pools carrying out due diligence. How will this work in practice and can pools offer scalable local investment opportunities for all administering authorities?
One persistent theme is the climate crisis and the related pressure on pension funds to decarbonise portfolios. However, with the Trump administration’s dismissive stance on decarbonisation, and with similar views echoed by the Reform Party in the UK, will the LGPS appetite for renewable energy and natural capital assets increase or decrease?
A voice for the LGPS
The LGPS community has watched closely as the 21 funds within Access and Brunel have sought new homes. As of September 9th, 13 funds have declared their pooling preference with 8 still to do so. What will the challenges of the expanded pools be and is this the final step in LGPS consolidation, or are we only at half time?
Conducted anonymously, the survey offers a unique opportunity to share perspectives on direction of LGPS. We welcome responses from administering authority pension officers, pension directors, LGPS senior officers, S151 officers, independent investment advisors, chairs of LGPS investment committees and LGPS pool investment practitioners.
The survey is open for responses until the 10th of October and the results will be covered on the Room 151 site, as well as at Room151’s LGPS Investment Forum on 4th November where Paul Myles of Schroders will examine the findings and present a summarised report.
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Click here to take part in the survey
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