NALC supports pension reforms to recognise councillor service and drive climate responsibility

We have welcomed the government's proposals to reintroduce principal authority councillors into the Local Government Pension Scheme (LGPS), while urging ministers to go further by extending access to councillors from larger parish and town councils and strengthening climate-related investment requirements.

In our response to the government's consultation on the LGPS in England and Wales, we argued that councillors and mayors provide a vital public service and should not suffer financial disadvantage as a result of their public duties. We support proposals to give mayors and councillors access to the scheme, describing the removal of principal authority councillors from the LGPS in 2014 as a "travesty" that should now be rectified.

However, we are clear that fairness requires a broader approach. We believe access to the LGPS should also be extended to councillors, mayors, and chairs of larger parish and town councils, defined as those with an annual budgeted precept or turnover of more than £600,000, where those councillors receive the Parish Basic Allowance or a mayor's or chair's allowance and where the council is already a scheme member. For 2025/26, only 309 parish and town councils meet this financial threshold, meaning the overall cost impact on the sector would be limited.

We note that where council employees are already members of the LGPS, there should be no practical barrier to eligible councillors also participating. We also highlighted that only around 21 per cent of parish and town councils currently pay the Parish Basic Allowance, further reducing the potential financial burden.

Alongside governance and fairness issues, we placed a strong emphasis on climate responsibility within the LGPS. We are calling on the government to require LGPS fund managers nationally, including the Brunel Pension Partnership, to adopt investment strategies aligned with the goals of the Paris Agreement. It would include limiting global warming to 1.5°C, setting measurable interim targets such as reducing the overall carbon footprint of investments by at least 50% by 2030, and excluding companies involved in new fossil fuel exploration and production.

We also urged the government to encourage parish and town councils to review their investment policies and pension fund affiliations, with a view to divesting from fossil fuel extraction and production as rapidly as possible and no later than 2030. It is necessary to align local government finance with the UK's legally binding net zero target for 2050 and its interim Carbon Budgets.

In addition, we support proposals to remove the requirement for secretary of state consent where clearly defined eligibility criteria are met, allowing administering authorities and employers to make decisions locally. We have also called for the criteria for scheme access to be set out clearly in legislation, supported by practical guidance.

To help parish and town councils implement ethical and climate-conscious financial decisions, we are asking the government to provide or signpost resources, advice, and workshops, including model ethical investment policies and partnerships with expert organisations such as UK Divest, the Local Authority Pension Fund Forum, and Climate Emergency UK.

Our response strongly endorses the government's stated ambition to rebuild and reshape local government, while pressing for a more inclusive LGPS and a pension system that actively supports the transition to a low-carbon economy.