A government consultation on revoking and replacing LGPS regulation has been welcomed by the Pensions and Lifetime Savings Association.

The consultation, which suggests replacing regulations that currently govern the management and investment of funds in the LGPS, closed on 16 February.

PLSA says it welcomes the "prudent person" approach but has raised questions about whether the government has gone too far in stripping back regulations.

Chief executive of PLSA Joanne Segars said although consultation's recommendations were largely in line with its own views, the organisation had concerns about fiduciary duty.

She said: ""We have argued for almost a decade that arbitrary limits on the amount LGPS funds can invest in certain types of legal structure are prescriptive, out-of-date, and do not best meet the needs of funds or beneficiaries, so we welcome the removal of these limitations and the move towards the prudent person approach.

"But there is a danger that government may have gone too far in a number of areas and one area of concern centres on fiduciary duty."

Segars went on the highlight the importance of recognising the "ultimate purpose" of LGPS investments, which is to pay members' benefits.

She said it would be helpful to make this clear in the investment regulations.

"While we agree with the government's proposals for pooling, there is a risk that such broad powers, combined with the lack of an explicit fiduciary duty, could be used by future governments to direct what and where funds invest."

"It would be more reassuring for employers and scheme members if there were greater checks and balances included in the regulations before using any power to direct."

Segars went onto say that PLSA is "sceptical" about the value of the impending guidance on how environmental, social and governmental factors should reflect the UK's foreign policy – and raised a concern about the timescale.

"The six-month timescale for implementation of these regulations could prove incredibly challenging for funds, especially at time when they are focusing on pooling their investments," she said.

PLSA recommends are more proportionate timescale.

First published 24.02.2016

Lindsay.sharman@wilmingtonplc.com