On the go: The Department for Levelling Up, Housing and Communities is expected to consult on the new requirement for Local Government Pension Scheme funds to set out plans for investing up to 5 per cent of their assets in domestic projects, the LGPS Scheme Advisory Board has said.
On February 2, the DLUHC published its ‘Levelling up’ white paper, which, among a wide range of policies aimed across government departments, included a request for LGPS funds to set out plans for investing up to 5 per cent of their assets in projects that support domestic initiatives.
The policy drew sceptical responses from a handful of LGPS funds, which highlighted possible tensions between the goal and their own fiduciary responsibilities.
After the announcement, the SAB said it expected more details concerning the proposals to emerge through discussions with the government over the coming months.
“We understand there will be a consultation in the summer, which should also cover the outstanding climate risk and reporting [Task Force on Climate-related Financial Disclosures] regulations, and pooling guidance,” said SAB deputy secretary Joanne Donnelly.
It is thought it is unlikely that the consultation will take place before this year’s local elections, which will happen in early May.
The Department for Work and Pensions’ own TCFD consultation closed in January. It has suggested that trustees be required to report on a new “portfolio alignment” metric, designed to inform scheme members of the extent to which their portfolios are aligned with Paris Agreement targets.
In October 2021, schemes with more than £5bn in assets were compelled to publish their first TCFD reports in the first half of 2022. Next October, large pension schemes with £1bn to £5bn in assets will be expected to comply with the requirements, and eventually all schemes with assets of more than £500mn will have to comply.
The DLUHC has been approached for comment.
