The conflict between Community Wealth Building and the fiduciary duty of Scotland’s Local Government Pension Funds.
Recommendations
1. Ministers should ensure that the “Community Wealth Building Statement” and the “Guidelines”which are issued in accordance with the Community Wealth Building (Scotland) Act 2026, fully incorporate the principles of community wealth building.
2. The LGPS funds should contribute an initial 1% of the current asset value of the funds to a Scottish Domestic Investment Fund (SDIF) for the purpose of providing direct equity capital to support the productive capacity of the economy and to increase Scottish ownership of companies and national assets.
3. The LGPS funds should engage with Ministers to agree the terms upon which Scottish Government Bonds would be acceptable as assets in keeping with their fiduciary duty and the principles of community wealth building.
4. Should there be any concerns that investments in keeping with this new understanding of fiduciary duty, and the principles of community wealth building, risk a lower rate of financial return, the employers who participate in the LGPS funds should be prohibited from taking “contributions holidays”, such as those which led to a large reduction in pension contributions income during the financial years 2024/25 and 2025/26. Final figures for 2025/26 are not yet available pending publication of the LGPS funds’ Annual Reports but in 2024/25 the reduction in contributions income amounted to £444 million.
In Scotland we need to invest in ourselves