Paul Myles: These insights are key to navigating the formidable challenges currently facing LGPS
More than four in five local government pension scheme (LGPS) professionals (83%) expect further government-driven pool consolidation after March 2026, when the current eight pools reduce to six, latest Schroders research shows.
The asset manager's 2025 annual LGPS Survey – published in collaboration with Room151 – found that, of that 83%, almost half (49%) expect the government will push for further consolidation, but of pension funds and not pools, whereas 34% believe the government will push for further pool consolidation.
The survey also recorded notable resistance to mandation once again this year – with nearly two-thirds of respondents opposing being mandated to invest either an additional 5% in the UK to support levelling up (62%) or to invest at least 10% in growth equity and venture capital (63%).
At the same time, investors continue to look for highly localised investments, with 67% seeking investments within their pool area or their administering authority area.
However, respondents noted challenges to such place-based investing – with three-quarters of respondents (77%) noting a lack of investible local opportunities from a financial return perspective.
The slow deployment of capital was also cited by 28% of respondents as one of the two biggest barriers to successful place-based impact investing, up 13% on 2024.
The survey also revealed evolving asset allocation trends, with four in ten (41%) respondents increasing their allocation to renewable infrastructure, and with 40% of respondents considering new natural capital allocations. In private debt, there was a discernible shift from direct lending to real asset debt, indicating a strategic pivot in investment approaches.
Schroders said the survey – of 82 LGPS professionals in senior roles across various pools and administering authorities – provided key insights into the current landscape and future direction of the LGPS, with this year's findings underscoring the importance of maintaining strong funding discipline, transparent governance, and responsible investment practices.
Schroders head of LGPS Paul Myles said: "These insights are key to navigating the formidable challenges currently facing LGPS, from local government reorganisations to pooling reform. At the same time, the clear opposition from the industry to mandation continues, with roughly two-thirds continuing to oppose government-directed investments.
"Understanding these trends will be crucial to better supporting LGPS members in achieving their long-term investment objectives and allowing LGPS funds to pay the pensions of public sector workers for years to come."
