In its response, the SPP provided a detailed set of technical comments aimed at clarifying policy intent, improving operability and reducing the risk of unintended consequences for administering authorities, funds and employers.
Balancing funding objectives and investment realities
A central area of concern for the SPP relates to the interaction between funding objectives and investment decision-making. Its response notes that the provisions of Regulation 11, which set out an authority’s high-level financial objectives, offer a basic framework that may be reasonable in certain contexts. However, the SPP goes on to argue that the regulation does not adequately explain how funds are expected to balance return objectives with contribution stability requirements, while also meeting obligations to consider local economic priorities.
This lack of clarity, according to the SPP, could create practical challenges for funds attempting to reconcile competing objectives, particularly in periods of market volatility or when managing deficits and surpluses.
Concerns over rigidity in investment strategy reviews
The response also raises concerns about how frequently investment strategies are expected to be reviewed. Regulations 10 to 15 imply that an administering authority’s investment strategy is set once every three years alongside the actuarial valuation, with no formal review during the intervening period.
While acknowledging that investment strategies are designed with a medium to long-term horizon in mind, the SPP stresses that they should not be treated as static documents. It cautions against a ‘set and forget’ approach, noting that changing market conditions, funding positions and employer circumstances may require more active oversight and adjustment between formal valuation cycles.
Clarity on pooling and implementation responsibilities
The SPP also comments on Regulation 13, which requires asset pool companies to take all reasonable steps to implement the investment strategy of participating authorities. It suggests that the wording used in one of the consultation questions provides greater clarity than the regulation itself and should be adopted to reduce ambiguity around responsibilities and expectations.
Clearer drafting, the SPP argues, would help support more effective collaboration between administering authorities and asset pools, while reducing the risk of disputes or inconsistent interpretation.
Stability for employers and the role of investment strategy
Another concern relates to the emphasis on stable primary contribution rates. The SPP notes that focusing solely on primary rates does not necessarily ensure stability for employers, particularly where funds are managing surpluses or recovering deficits. In this context, the investment strategy plays a critical role in shaping long-term affordability and risk-sharing across the scheme.
Areas of support within the proposals
Alongside its concerns, the SPP expresses support for several elements of the proposed reforms. It describes the requirement for administering authorities to publish their investment strategies by 30 September 2026 as challenging but achievable, provided adequate resources and planning are in place.
The SPP also agrees with the proposal in Regulation 14 to link the three-yearly review of the investment strategy to the triennial actuarial valuation, noting that this broadly reflects current practice across the LGPS.
Reform without undermining confidence
Commenting on the SPP’s response, Kirsty McLean, Chair of its Public Sector Committee, said the organisation welcomed signs from the Government that it had taken on board some of the concerns raised in its earlier submission. McLean said, “We hope that our constructive comments prove helpful in ensuring that Government policy intentions are met as best as possible and that unintended consequences are minimised.”
The SPP’s overall message is that reform must strengthen the LGPS while preserving local accountability, protecting member interests and maintaining confidence among employers and administrators. It stresses that a sustainable LGPS is not only in the interests of members and employers but also plays a wider role as a source of long-term domestic investment and a supporter of local economic development.
Luke Carter, Regulatory Consultant at Equiniti said,
The SPP’s response highlights the practical challenges of translating high-level policy objectives into workable governance and investment frameworks. As LGPS funds continue to evolve, clarity, flexibility, and strong decision-making structures will be essential to ensure that well-intentioned reforms support long-term resilience without adding unnecessary complexity.”
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