Public Service Pensions Update: June 2025

This month we lead with four developments relevant to the Local Government Pension Scheme (LGPS) and then move on to four more relevant to all public service pension schemes. It will be no surprise to see that recent consultation responses and the Pension Schemes Bill receive a special mention.

If you would like to discuss any of the items in this newsletter, please contact one of the experts listed at the end of the update.

Focus on the LGPS 

'Fit for the future' | Government releases consultation response and Pension Schemes Bill

On 29 May, the government released the final report on phase one of its pensions review, together with its responses to two related consultations; LGPS "fit for the future" and unlocking the UK defined contribution pensions market for growth.

On 5 June, the Pension Schemes Bill 2024-25 was introduced into Parliament and the government released a workplace pensions roadmap setting out its provisional plan to implement reforms to the LGPS and across all workplace pensions.

The "fit for the future" consultation response confirms which changes to the LGPS the government intends to legislate for. The relevant provisions and regulation-making powers are then contained in chapter 1 of part 1 of the Pension Schemes Bill. There are provisions and regulation-making powers in connection with asset pools/asset pool companies, governance reviews, and investment strategy and co-operation with strategic authorities. The bill will also modify the effect of part of the Procurement Act 2023 for pools.

Another provision in the bill of interest to funds is one set to undo the effect of a recent Court of Appeal decision and make it clear that the Pensions Ombudsman is a "competent court" for the purposes of section 91(6) of the Pensions Act 1995. In practical terms, this will remove the need for funds to take the additional step of referring a Pensions Ombudsman decision to the County Court in any case where a member disputes the recovery of past overpayments through equitable set off but a Pensions Ombudsman decision confirms that the fund can proceed.

The LGPS Advisory Board, in a statement on the consultation response, confirmed that it would remain committed to supporting funds and the scheme through the transition. The board stated that it would continue "to engage with government to ensure that funds are given the time necessary to establish the governance structures required, both at fund and pool level" and that it would work closely with government officials "to develop the practical guidance needed to support implementation and to clarify the details".

2025 actuarial valuation | LGPS Advisory Board shares guidance for administering authorities

The LGPS Advisory Board has published a statement to provide guidance to administering authorities on the 2025 actuarial valuation process.

The statement includes links to and is designed to be read in conjunction with the board’s January 2024 statement on managing surplus and the January 2025 funding strategy statement guidance.

Investment | UK spending review

The UK chancellor presented her spending review to Parliament on 11 June.

The recent Mansion House accord was listed as one of the steps the government has taken to drive growth since the autumn. The accord aims to secure £50 billion of investment from pension funds for productive investment, including in UK businesses and for major infrastructure projects. 

There was also an announcement that the British Business Bank's (BBB) total financial capacity will increase to £25.6 billion, supporting a two-thirds increase in support for UK innovative businesses compared to 2025-26 "crowding in tens of billions of pounds more in private capital". This would allow the bank to continue flagship programmes, such as Start-Up Loans and the Nations and Regions Investments Fund. The BBB has welcomed this announcement and confirmed that further details of new measures supported by the increase in capacity will be announced over the coming weeks.

In a spending review that brought a boost for housing and infrastructure, there was also confirmation that the government will publish later this month its modern industrial strategy, which will include the detail of how it will capture the growth benefits from sectors driving the net-zero transition and a 10-year infrastructure strategy. A carbon budget and growth-delivery plan will follow in October.

Stewardship | FRC publishes new UK stewardship code

The Financial Reporting Council (FRC) has published the UK Stewardship Code 2026. The related policy statement contained links to key documents. In it, the FRC explained that, to support signatories in adapting to the new code, 2026 will serve as a "transition year". It added: "During this period, no existing signatories will be removed from the signatory list following their 2026 application. This will allow current signatories to familiarise themselves with the new format and use it as a platform to explain their individual approach to stewardship. The FRC will engage with signatories through publications, webinars, and bilateral discussions to support the transition."

All schemes 

Widespread reform | Government publishes Pension Schemes Bill and confirms stage two of its pensions review will start 'in the near future'

On 5 June the Pension Schemes Bill 2024-25 was introduced to Parliament and the government published a workplace pensions roadmap setting out its plan to implement reforms to the LGPS and all workplace pensions.

The bill brings together a range of reforms, mostly intended to improve retirement outcomes for members and to support UK economic growth. The roadmap explains how the reforms fit together and provides an indicative timeline for each one to take effect.

The roadmap also makes it clear that the bill forms part of a bigger picture.

Phase one of the government's pensions review and many of the provisions in the Pensions Schemes Bill are concerned with ensuring "that the money already in the system is performing as well as it can for savers and for the economy." Phase two of the government's pensions review, which is due to begin "in the near future" will then turn "to the wider questions of pension outcomes and what else is required to deliver more adequate retirement incomes for all."

In addition, to "ensure the necessary safeguards and flexibilities are in place to meet the demands of the evolving pensions landscape" the government plans to consult on measures to improve the governance of trust-based schemes later this year.

You can read more about the bill and roadmap in our Insight.

Pensions dashboards | Call to action

With public service pension schemes due to connect to the pensions dashboards digital architecture by 31 October 2025, preparations for connection should be well under way. We flagged recent guidance in the last edition. There are also a number of data and cyber compliance steps that funds should be taking.

These include agreeing updated terms of business with scheme administrators and additional voluntary contributions, or AVC, providers and completing some due diligence around the integrated service provider or software provider who will provide or support connection. They also include putting into place or updating scheme data and asset maps to reflect the new data flows that will come out of dashboards connection, completing a data privacy impact assessment updating privacy notices and updating risk registers.

Funds may wish to seek legal advice and review in these areas. 

The Pensions Ombudsman | Update on operating model review confirms what schemes can expect

The Pensions Ombudsman has published an update on its operating model review and confirmed that, for schemes, its priorities mean "a greater expectation…to complete a good quality and well signposted end to end complaint process [and]…an increased usage of expedited and short form determinations at various stages of our process. Schemes might also be asked for formal responses earlier in the ombudsman's process and find that deadlines are "tightened up". There will, however, be more "guidance on key topics that can be shared with members".

More information will be included in the ombudsman's annual report and accounts (due to be laid in Parliament in the summer) and in future news posts.

The Pensions Ombudsman | Recent decision

The Pensions Ombudsman has not upheld a complaint by a member of the NHS Pension Scheme that he was incorrectly denied early, unreduced retirement under special class status. The ombudsman agreed that the member was not in pensionable employment as a "nurse". The decision considers what it means to be "in pensionable employment as a nurse".  (CAS-58918-R9V9)

This newsletter covers developments relating to public service pensions in England with a focus on the Local Government Pension Scheme.