24 July 2026
6 min
On 16 July the Secretary of State for Housing, Communities and Local Government announced further decisions on Local Government Reorganisation (LGR). He also issued decision letters to the relevant Councils.
Two areas (West Sussex and Cambridgeshire/Peterborough) are still waiting for a decision as the government is taking further time to consider responses to the additional consultations. But most areas in England now know how they will be structured when the changes for their area come into force.
Once again, the LGPS didn’t get a mention. However, virtually all funds can now start preparing for the future.
There will be both internal and external boundary changes when compared to the current position and there have been some surprises when it came to the number of unitary authorities to be adopted. Not least for Oxfordshire, which has seen an increase in the size of Oxford City and the establishment of three unitaries, including taking over West Berkshire.
A key message, which is repeated across the various decision letters, is around housing and economic growth. The government has consistently approved the expansion of city boundaries across England with direct reference to increasing the available housing stock, something that will no doubt keenly interest funds and investment pools.
Another point of interest is that while the number of senior officers actively participating in funds will decrease, eg less 151 officers will be required, there will be service areas that may need to take on staff. In regions such as Warwickshire, the decision letter specifically points to disaggregation of services that are currently provided on a county wide basis and the loss of benefits of scale. This means funds in areas which see services disaggregated can expect to see a spike in the employment of more junior officers to fulfil these roles.
On the subject of administration tasks, we’ve been talking for some time about the administrative challenges that LGR will bring. There will need to be bulk transfers, changes to contracts and, sadly, redundancies. Where boundary changes take place, these challenges will be all the greater and only increase the scale and complexity of the work that needs to be carried out.
Many funds will want to see guidance to understand the governments expectations. However, waiting for this guidance for too long can introduce risks. The government is clear that it won’t seek to depart from the published timetable of elections in May 2027 and new authorities coming into being in April 2028 (in most places).
There are some key questions which need to be addressed, and funds will no doubt want to be part of the conversations:
Will it follow the existing approach where the Administering Authority is a local council or will it seek a different approach, such as becoming a Single Purpose Pension Authority (SPPA)? Each model has its own combination of benefits and challenges. While Surrey has received permission to adopt a SPPA model, and others are interested in a similar direction, LGPS funds are unlikely to benefit from a one-size-fits-all approach.
Will the Administering Authority be the location with a history of hosting the local fund or will it move? There are opportunities and challenges associated with all options. While it's highly likely the decision will not be made locally, funds are at the forefront of preparation are keen to understand the implications and take part in the inevitable debate. We’d recommend all funds investigate the pros and cons of the various Administering Authority options.
A new Pension Committee will need to be formed. There's likely to be an appetite to expand membership to cover the various unitaries that will make up the geographical area previously covered by a County Council (except for Gloucestershire, which is the only place to have a “One Unitary” proposal agreed). June’s fund governance guidance referenced this being a possibility, which may ease the concerns some have for an expanded Committee. That said, having representatives from multiple authorities means various authority constitutions will need to cover how it works, creating the challenge of reaching a consensus.
With member movements, retirements, redundancies and changing funding positions, contributions may look quite different when we reach the, surprisingly imminent, 2028 actuarial valuations. Not to mention the associated cashflow implications. All this may carry some unpleasant surprises for employers, and some funds are already starting to consider the implications.
It’s hard to argue that LGR won’t lead to a material change in how local funds in England will be run. So, there will be a duty to engage with LGPS members. It’s likely the uncertainty such wide changes cause will also lead to members becoming more nervous about the sustainability of their retirement provisions. With nervousness comes a riper landscape for pension scams so funds need to think carefully about what they say and, crucially, when they say it.
Along with BAU tasks, funds will need to ensure all member movements are properly accounted for. The changes taking place in April 2028 mean Annual Benefit Statements for 2027/28 should be unaffected, but funds will still need to promptly update records. There are also the not inconsequential impacts of a likely increase in member queries to be addressed.
For all areas affected by LGR, the government will need to guide a Structural Changes Order through Parliament. The timeline for these is yet to be declared, but work is expected to start shortly, if it hasn’t already.
Elections for the new authorities will take place in May 2027, leading to the creation of shadow authorities ahead of them formally taking over in April 2028. From April 2028 the LGPS will see a raft of new Administering Authorities being in place and they’ll have to be able to provide business as usual services from day one.
It’s vital that funds are proactive so they can make sure they are ready for April 2028 and continue to meet the needs of members. The ultimate question is, will you be ready?
Local government reorganisation will create both strategic and operational challenges for LGPS funds. If you'd like to discuss what these changes could mean for your fund, or how to prepare for the transition to April 2028, please get in touch.
This blog is based upon our understanding of events as at the date of publication. It is a general summary of topical matters and should not be regarded as financial advice. It should not be considered a substitute for professional advice on specific circumstances and objectives. Where this blog refers to legal matters please note that Hymans Robertson LLP is not qualified to provide legal opinion and therefore you may wish to obtain independent legal advice to consider any relevant law and/or regulation.
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