By James Heppe-Smith · 14 May 2026 · 10 min read
Educational, not advice. This article explains the governance framework for LGPS investment decisions: who decides what, what councillors and pensions committees can and cannot do, and how the rules constrain pressure from both ends of the political spectrum. It does not tell readers what investment policies a fund should adopt. Those questions are for elected pensions committees, advised by officers and the investment pool, within the constraints set by law and by fiduciary duty.
What this article covers
- Does: Set out who has legal authority over LGPS investment decisions, what that authority covers, where fiduciary duty creates hard limits on what councillors can do, how the October 2026 pooling reforms shift the governance picture, and what routes exist for ordinary scheme members to engage.
- Doesn’t: Take a position on whether the LGPS should pursue or avoid ESG-integrated investment, divestment from any specific sector, or any specific stewardship policy. Those are political and policy questions on which this site does not editorialise.
- If you need advice: For decisions about your own pension, speak to a regulated financial adviser or contact MoneyHelper.
LGPS investment decisions sit at an awkward intersection. The funds are publicly accountable through elected councillors. The members are public sector workers and their families. The assets are around £390 billion across 87 administering funds. And the legal framework, set by the LGPS Regulations and now by the Pension Schemes Act 2026, places a fiduciary duty on the pensions committee that does not bend to political pressure from any direction. The result is a system that is publicly visible, politically contested, and tightly constrained at the same time. After the 2026 local elections, that constraint became visible from both sides: newly elected councillors pushing in opposite directions on ESG-integrated investment, and pool-level decisions that limit how far either pressure can be acted upon at fund level. Here is the governance map, what it allows, and what it does not.
In short
- The pensions committee of each administering authority is legally responsible for the fund’s investment strategy. Committees are made up of councillors (typically the majority), trade union representatives, and (under the new governance reforms from October 2026) an independent person.
- The pensions committee owes a fiduciary duty to members and employers of the fund. This is a hard legal constraint. It prevents the committee from taking decisions for political reasons that are inconsistent with the financial interests of the fund.
- From October 2026, asset-level investment decisions sit with the investment pool rather than directly with the fund. The committee chooses among the strategies the pool offers and sets the fund’s overall asset allocation; the pool selects the underlying managers and securities.
- The pensions committee can set policy on ESG integration, stewardship priorities, and asset allocation, provided those policies are justified by reference to long-term investment returns, risk, or both. It cannot blanket-exclude sectors purely on political grounds.
- The pensions committee cannot direct specific stock picks, cannot dictate vote-by-vote stewardship decisions, and cannot bind the pool to adopt a strategy the pool’s fiduciaries judge inconsistent with member interests.
- For ordinary scheme members, the routes to influence are: writing to your pensions committee, attending the committee’s public meetings, engaging via the member representative seat, and (from 2026) via the pool’s member representation channels.
How members can engage
Ordinary LGPS members (the public sector workers contributing to the scheme, plus retired members drawing benefits) do not have a direct vote on investment decisions. The system is one of representative governance: councillors, who are themselves elected, sit on the committee. That said, there are four substantive routes for an LGPS member who wants to engage with how their fund’s assets are invested.
- Read the Investment Strategy Statement. Every fund publishes its ISS on its website. It is the single most useful document. Reading it tells you what your committee’s actual policy is, rather than what political messaging around the committee suggests.
- Write to your pensions committee. Pensions committees receive correspondence from members. Substantive, specific points about the ISS or the fund’s stewardship policy are taken seriously by officers. Generic political statements are less effective than precise observations on specific paragraphs of the published policy.
- Attend the committee’s meetings. Pensions committee meetings are public meetings. Members can attend and (subject to the committee’s procedural rules) submit questions. Some councils allow members to address the committee directly during a public participation segment.
- Engage via member-representative seats. Most pensions committees include trade union nominees as employee representatives. From October 2026, each investment pool is also required to include member representation in its governance structure. If you are an LGPS member with a strong interest in investment governance, the route into that conversation is via these seats as well as via your fund’s committee.
Common questions
Can my councillor vote to ban my pension from investing in oil?
A councillor can vote, on the pensions committee, for an Investment Strategy Statement that excludes or limits exposure to fossil fuels, provided the exclusion can be justified on long-term financial grounds (regulatory risk, stranded asset risk, transition risk). An exclusion purely on political grounds with no financial justification is on weaker legal ground and may be challengeable. The committee’s decision must be documented in the ISS and consistent with fiduciary duty.
Can my councillor vote to scrap ESG integration entirely?
A councillor can vote for an Investment Strategy Statement that takes a narrower view of ESG integration, provided the policy is justified on the same long-term financial grounds. A policy that ignores ESG factors entirely, where those factors are financially material to long-term returns or risk, would itself be inconsistent with fiduciary duty. The legal framework requires consideration of material factors regardless of which way the committee then weighs them.
Do I have a say in how my LGPS pension is invested?
Not a direct vote. LGPS members do not vote on investment policy. You can read your fund’s Investment Strategy Statement, write to your pensions committee, attend public meetings, and engage via the trade union member-representative seats or the pool’s member representation channels. Substantive, specific engagement on the published policy is more effective than generic political statements.
If the pensions committee makes a bad investment decision, what happens to my pension?
LGPS benefits are defined by statute and are not directly tied to fund investment performance. Member contribution rates are set by national salary band, not by fund returns. Where investment performance affects the scheme, it does so via employer contribution rates, which are reviewed every three years at fund level (the next valuation is 2028). Poor returns generally translate into higher employer contributions, not into reduced member benefits.
How does this change from October 2026?
From 1 October 2026, asset-level investment decisions move from the fund to the investment pool. The pensions committee retains authority over the Investment Strategy Statement, asset allocation, and overall policy direction. Specific manager and security selection decisions sit with the pool. Each fund must also have a Senior LGPS Officer and a nominated independent person from that date. See our separate article on LGPS megafunds and what changes in October 2026 for the full picture.
Pension Plain’s take
The political debate about LGPS investment policy is usually framed in maximalist terms: a fund either embraces ESG or rejects it; a council either divests or insists on continued investment. The legal framework is much more constrained than either side of that debate often acknowledges. Pensions committees operate inside a fiduciary box. The size of the box has been set by decades of regulation, case law, and ministerial guidance, and the box does not move depending on which way the political wind is blowing. What moves is the policy choices a committee makes within the box, and those choices have to be capable of being defended in writing, in the Investment Strategy Statement, on long-term financial grounds.
The October 2026 governance shift makes this constraint operationally tighter. Decisions that used to be implemented by the fund’s own investment team are now implemented by the pool, which is itself accountable to a wider partnership of funds and not just to one council’s pensions committee. A committee that wants to shift the fund’s policy direction now has to do it through the ISS and through engagement with the pool, rather than by direct instruction to a fund-level investment team. That is, on balance, a stronger system: it makes politically-motivated decisions harder to push through without proper financial analysis, in any direction.
For members, the most underrated piece of advice is read your fund’s ISS. It tells you what is actually happening. It is the document a committee is legally required to defend. It is much more informative about what your fund does with your pension money than the local political coverage of pensions committee decisions usually is.
Information, not advice. This article explains the governance framework for LGPS investment decisions and the constraints on what councillors and pensions committees can do. It does not take a position on any specific investment policy and does not recommend any particular ESG, divestment, or stewardship approach. Pension Plain is not authorised or regulated by the FCA. For decisions about your own pension, speak to a regulated independent financial adviser or contact MoneyHelper.
Key official sources
- LGPS Scheme Advisory Board (responsible investment guidance, briefing papers).
- LGPS (Management and Investment of Funds) Regulations 2016 (legislation.gov.uk).
- Pension Schemes Act 2026 (legislation.gov.uk).
- The Pensions Regulator (guidance on fiduciary duty and responsible investment).
- Pension Plain: LGPS guide (member benefit structure).
- Pension Plain: LGPS six megafunds and what changes in October 2026 (pooling structure).
- Pension Plain: LGPS for councillors and mayors (eligibility for councillors to join the scheme themselves).
- MoneyHelper (free, impartial pension guidance).
Fact-checked 14 May 2026.