Managing a Local Government Pension Scheme (LGPS) fund comes with a complex set of legal responsibilities. You operate in an environment shaped by evolving regulations and heightened scrutiny.
Balancing your fiduciary duties as you respond to shifting expectations can feel challenging, but you’re not alone. Many in your position face similar pressures, from reacting to government proposals for pension reform to overseeing diverse stakeholder interests.
Understanding the key fiduciary obligations can help you approach LGPS management with clarity and confidence.
Putting Members First
Your primary responsibility is to the scheme’s members, both current and future. Every decision you make must serve their best interests, ensuring prolonged security and stability. Acting in good faith means prioritising the sustainability of the fund and safeguarding member benefits.
Although various stakeholders may exert pressure, your focus should always remain on delivering the best outcomes for scheme members. Enlisting the help of Local Government Pension Scheme advisory services could provide you with valuable guidance on balancing these competing interests effectively.
Taking a Strategic Approach to Investment
Supervising LGPS investments requires a disciplined, forward-looking strategy. Prudent investment doesn’t mean avoiding risk entirely; it means taking well-calculated, informed risks that support lasting growth.
A strong example of this approach is the Kensington & Chelsea pension scheme, which achieved an annualised return of 11.6% over ten years to March 2024 – well above the LGPS average of 7.8%. By strategically increasing its allocation to equities while reducing exposure to bonds, the scheme outperformed many of its peers while maintaining financial resilience.
Ensuring Financial Stability
Ensuring the financial strength of the fund goes beyond simply maximising returns. You need to strike the right balance between growth, sustainability and risk management. A well-structured approach prioritises long-term security, ensuring that today’s decisions support a stable future for all members.
While ethical or responsible investment options can be explored, financial prudence remains the top priority. Every investment choice should align with the best interests of scheme members, maintaining the fund’s integrity and avoiding any risks that could undermine its financial stability.
Navigate Your Responsibilities with Confidence
Managing an LGPS fund is a dynamic and evolving responsibility. Even though you’re expected to make informed and strategic decisions, you don’t have to navigate the complexities alone.
Being proactive and seeking expert guidance when needed can help you stay ahead of regulatory changes and mitigate risks, ensuring that your fund continues to serve its members effectively.
