What the Government’s latest LGPS consultation means for employers & the social housing sector

In October last year, the Government launched its third and most significant consultation on proposed improvements to the Local Government Pension Scheme (LGPS) in England and Wales. As one of the largest pension schemes in the UK, serving over 6.7m members and more than 18,000 participating employers, any changes to the LGPS have wide‑reaching operational and financial consequences.

Given this scale and complexity, the legislative framework must be regularly reviewed to ensure that it continues to meet the needs of both members and employers. Recent consultations — including Fit for the Future and Access and Fairness — have focused on strengthening the scheme. The latest consultation, Scheme Improvements (Access and Protections), continues this approach.

These reforms also carry significant implications for the social housing sector, where many organisations interact with the LGPS through ALMOs, repairs contracts, homelessness services and wider local authority partnerships.

The consultation closed on 22 December 2025 and sets out four key proposals covering:

1. Normal Minimum Pension Age.
2. Extending access for councillors and mayors.
3. Applications and directions: academies.
4. A new Fair Deal.
    

Here, Head of Pensions Kim Jones explores these proposals and what they could mean for administering authorities, participating employers, scheme members and organisations across the social housing sector.

Normal Minimum Pension Age

Reflecting trends in longer life expectancy, the consultation proposes increasing the Normal Minimum Pension Age (NMPA) in the LGPS from 55 to 57, aligning it with changes legislated in the Finance Act 2022, which sets the NMPA at 57 for all registered pension schemes from 6 April 2028.

However, members who participated in the LGPS immediately prior to 4 November 2021 will retain a Protected Pension Age (PPA) under the Finance Act 2022, allowing them to take benefits earlier. Similarly, members who transferred into the LGPS from a relevant registered pension scheme where they had the right to take pension benefits before age 57 will continue to benefit from this PPA also.

To apply these protections correctly, scheme administrators will need to review their records immediately prior to 4 November 2021 to identify any members with rights to take their pension benefits before age 57. This will be an essential step to ensure compliance. 

Access for councillors & mayors

As part of its plan to rebuild and reshape local government, the Government expects local councillors and mayors to take on additional responsibilities. For mayors, this includes the role of Police and Crime Commissioner — a position that’s already eligible for access to the LGPS. 

With effect from 11 May 2026, councillors’ access to the LGPS will be reinstated in England and there will be new access for mayors. In Scotland, Wales and Northern Ireland, councillors and mayors are already eligible, so this brings England in line with the rest of the UK.

Alongside the consultation, the Government has published a set of draft regulations to give effect to the proposal. The intention is that — as far as possible — ‘elected members’ should be treated the same as other LGPS members. 

However, certain caveats are proposed, including that:

1. Elected members won’t be subject to automatic enrolment and must actively decide whether to join the scheme. 
2. Employers won’t be permitted to award additional pension, make shared additional voluntary contributions (AVCs) or fund additional pension contributions for elected members. 
3. A new definition of pensionable pay will apply, covering both basic pay allowances and special responsibility allowances. 
4. Elected members won’t be allowed to combine any LGPS membership accrued in this capacity with other LGPS membership they may hold. 
5. Flexible retirement won’t be permitted. 
6. No early access to benefits on redundancy will be allowed.

Applications for directions: academies

The consultation proposes simplifying the process for academies and multi-academy trusts (MATs) seeking a direction to consolidate their LGPS members into a single administering authority. Under current legislation, academies are linked to the administering authority for the area that they’re located. For MATs operating across several local authority areas, this results in multiple administering authorities and a significant administrative burden.

The consultation suggests introducing defined statutory criteria for applications where granting a direction shows clear value for money and there’s an existing relationship between the MAT and administering authority. Where these criteria are met, the requirement for Secretary of State consent would be removed.

Participating employers should be aware of the risks associated with transferring and consolidating scheme assets and member records. Robust compliance measures will be essential to maintain data accuracy and security, protect member entitlements and meet regulatory requirements throughout the process.

Fair Deal protections: outsourced workers

The consultation revisits the long-debated issue of Fair Deal, building on earlier consultations in 2016 and 2019. Under the proposed New Fair Deal framework, outsourced workers employed by Fair Deal employers would retain access to the LGPS throughout their outsourcing, even when transferred to private or third-party contractors. Importantly, this protection would continue throughout any subsequent sub-contracting, provided that the outsourced worker remains wholly or mainly engaged in the outsourced activities carried out by the contractor on the Fair Deal employer’s behalf.  

The New Fair Deal marks a significant departure from previous arrangements, as the option for employers to offer a “broadly comparable scheme” would be removed. Instead, the LGPS would create a single, consistent route for pension protection under the LGPS, aligning with the position of other public service pension schemes. Protected transferees would also have the option to transfer any final salary benefits from a broadly comparable scheme into the LGPS to preserve the value of those benefits. However, any future pension accrual within the LGPS would continue to be on a Career Average Revalued Earnings (CARE) basis.

Perhaps the most significant proposal is that — for all future outsourcings — admission body status would no longer be a permitted route. Instead, Fair Deal employers would need to use the deemed employer route, except in exceptional circumstances. Under this model, the Fair Deal employer would be treated as the Scheme Employer for LGPS purposes, with only certain responsibilities being taken on by the contractor. It’s expected that this approach should, over time, reduce the number of participating employers in the LGPS, decreasing the cost and risks for scheme administration.

Why Fair Deal reform matters for the social housing sector 

The social housing sector intersects with LGPS in multiple ways, particularly where ALMOs, repairs contractors, homelessness services and support providers engage in local authority contractual arrangements. 

1. Increased consistency & compliance

Housing associations and service providers often work across several local authorities, each historically applying LGPS admission requirements and risk-sharing differently. 

The New Fair Deal regulations could: 

• Standardise pension requirements across contracts. 
• Reduce the administrative burden of negotiating admission agreements. 
• Minimise the risk of inconsistent treatment of transferring staff. 

2. Contract pricing & risk allocation 

Pension risk remains a major driver of contract pricing in housing-related services. 

Providers have struggled with the unpredictability of: 

• Employer contribution volatility.
• Exit debt exposure.
• Bond and guarantee requirements.
• Long‑term pension liabilities on contract termination.

Moving to a deemed employer model may significantly alter how these risks are allocated, with important implications for bid pricing, contract length and financial modelling.

Next steps

Draft regulations implementing these changes have been published alongside the consultation and further developments are expected during 2026.

Organisations in the social housing sector — both commissioning bodies and service providers —should begin assessing how these changes may affect existing and future contractual arrangements, particularly where outsourcing, re‑procurement or contract variation is anticipated.

Talk to us

Our pensions team has extensive experience advising on LGPS participation, Fair Deal protections and outsourcing arrangements across the housing and public sector. 

If you’d like to discuss how these proposals may affect your organisation, talk to us by calling 0333 004 4488, emailing hello@brabners.com or filling in our contact form below.