Important Local Government Reorganisation Guidance for Administering Authorities

With Local Government Reorganisation (LGR) very much one of the hot topics at the moment, where an existing LGPS pension fund will ultimately end up once the music stops is not necessarily always front and centre as part of the proposals being put forward and/or the discussions taking place. 

It is therefore encouraging to see that the Ministry for Housing, Communities and Local Government (MHCLG) has just published guidance on this issue for 151 officers, officers in Local Government Pension Scheme (LGPS) funds, LGPS senior officers, Local Government Pension Committee members and Local Government Pension Board members - see here

As part of LGR, a new administering authority may need to be designated for an LGPS pension fund (for example where the existing county council that is currently the administering authority will cease to exist and be replaced by one or more new unitary councils). 

The guidance makes clear that where the LGPS pension fund ultimately ends up is a local decision, but it still requires agreement from the Secretary of State to confer administering authority functions on the new body which is ultimately selected and to put in place a statutory novation of the assets and liabilities of the previous administering authority, and the other councils involved in the unitarisation, to the new administering authority. 

While the guidance does not cover the operational activities and management decisions involved in preparing and implementing reorganisation within an LGPS pension fund, it does set out: 

• the considerations to be taken into account when selecting a new administering authority (including the option of a potential standalone single purpose pension authority (SPPA))

• how to engage with MHCLG when deciding on a new administering authority 

• the timings for any decision 

At an already busy time for LGPS pension funds, it is important to note the timings set out in the guidance which are: 

• any proposals to create an SPPA will need to be received by MHCLG by 15 February 2027 – if ministers are then minded to agree to the proposal, the decision will be reviewed and ratified by the shadow authorities following their elections in May 2027

• where the proposal is for an LGPS pension fund to move administering authority to a new unitary authority, there are two possible tracks which can be followed: 

  • where the administering authority is able to submit a proposal to MHCLG in advance of the election of shadow authorities, these should be received by MHCLG by 1 March 2027. This will allow a decision to be made in principle by ministers, to be reviewed and ratified by the shadow authorities following their elections in May 2027

  • if the proposal cannot be submitted before the election of the shadow authorities, this must be received by 30 September 2027

The guidance also states that the Local Government Pension Team from MHCLG will be beginning a period of regular engagement from summer 2026 to support LGPS pension funds in meeting these deadlines. 

Comments 

With LGPS pension funds already busy with implementing all the other recent changes to the LGPS and investment pooling, the potential impact of LGR and the need to work out the route that you want to take in conjunction with local stakeholders adds another issue to the already busy inbox. However, it is positive that MHCLG has published useful guidance in this area to make sure that this important issue is very much at the forefront of any LGR considerations.