By Professor David Bailey and Professor John Clancy
28th January 2026

UK LGPS Actuaries Firms' 'quadopoly' reported to Competition & Markets Authority

Bailey and Clancy make Enterprise Act 2002 pt.4 request for a formal market study.

"Actuarial advice to LGPS funds is highly concentrated, persistent, and characterised by limited differentiation of outcomes...A small number of large firms dominate...barriers to entry appear structural...new entry or expansion by smaller firms is rare.""

27th January 2026

Dear Sir / Madam,

We are writing to request that the Competition and Markets Authority (CMA) consider opening a formal market study under Part 4 of the Enterprise Act 2002 into the provision of actuarial advisory services to Local Government Pension Scheme (LGPS) funds in the United Kingdom.
We believe there are reasonable grounds to suspect that features of this market prevent, restrict, or distort competition, within the meaning of section 131 of the Enterprise Act, and that these features may be leading to adverse outcomes for administering authorities, scheme employers, and ultimately the public purse.

Executive Summary
The market for actuarial advice to LGPS funds is highly concentrated, persistent, and characterised by limited differentiation of outcomes, despite the critical strategic and financial importance of the advice provided. A small number of large firms dominate appointments across successive valuation cycles, barriers to entry appear structural, and buyers face acute information asymmetry.
These conditions closely mirror those which have previously justified CMA intervention in related markets, including investment consultancy and fiduciary management. Given the scale of the LGPS, even modest competition failures may have material fiscal and public-interest consequences. A CMA market study would provide an appropriate framework to assess these issues and consider proportionate remedies.

Market Features Giving Rise to Competition Concerns
1. High and Persistent Market Concentration
The LGPS actuarial advisory market is dominated by a small number of large firms, with market shares that appear stable across multiple triennial valuation cycles. Switching between providers is limited, and new entry or expansion by smaller firms is rare. This persistence suggests that normal competitive pressures may not be operating effectively.
2. Homogeneity of Advice and Outcomes
Across LGPS funds, actuarial advice on key funding parameters (such as discount rates, funding prudence, deficit recovery periods, and de-risking strategies) exhibits a striking degree of uniformity across competing firms. While professional consensus can be efficient, the consistency of recommendations across nominal competitors raises questions as to whether competition is delivering meaningful choice, innovation, or value for money.
3. Barriers to Entry and Expansion
Barriers faced by smaller or challenger actuarial firms appear to be structural rather than capability-based. These include: procurement frameworks that favour incumbents; risk aversion by administering authorities driven by perceived reputational and governance risk; scale and resourcing requirements associated with LGPS work.
Collectively, these features may inhibit entry and expansion even where credible alternatives exist.

4. Bundling and Vertical Integration of Services
Actuarial advice is frequently bundled with investment consultancy, covenant assessment, and implementation support by the same firms. This bundling may:
·         reinforce incumbency advantages;
·         foreclose competition from specialist providers;
·         weaken incentives to recommend simpler or lower-cost strategies;
·         increase dependency on ongoing advisory services.

5. Weak Buyer Power and Information Asymmetry
LGPS administering authorities are infrequent purchasers of actuarial services and are heavily reliant on highly technical advice that is difficult to benchmark or challenge. Governance structures, statutory duties, and committee decision-making further constrain buyer power, increasing the risk that outcomes are supplier-led rather than competitively disciplined.

Evidence from LGPS Valuation Cycles
Without reference to individual funds, a number of recurring patterns can be observed across valuation cycles:
·         similar funding strategies recommended across materially different funds;
·         limited use of materially divergent assumptions between providers;
·         consistent emphasis on increased prudence and complexity over time;
·         relatively little evidence of alternative funding approaches being actively presented to decision-makers.
These patterns may be consistent with weakened incentives to differentiate advice in a concentrated market.

Potential Detriment
The features outlined above may be contributing to:
·         conservative and standardised funding strategies insufficiently tailored to scheme-specific circumstances;
·         higher and more volatile employer contribution rates;
·         increased advisory costs and complexity over time;
·         reduced innovation in funding and risk-management approaches.
Given the size of the LGPS, these effects have potential systemic fiscal implications for local authorities and public-sector employers.

Public-Sector Procurement and Value-for-Money Considerations
LGPS funds operate within public-sector procurement frameworks and are subject to value-for-money and fiduciary obligations. Where markets are highly concentrated and advice is difficult to challenge, procurement processes alone may be insufficient to deliver effective competition or optimal outcomes. This further strengthens the case for CMA scrutiny.

Rationale for a CMA Market Study
A market study would allow the CMA to:
·         assess whether market concentration, procurement practices, and service bundling restrict effective competition;
·         distinguish between efficient professional consensus and outcomes driven by weak competitive incentives;
·         consider whether guidance, transparency measures, or other pro-competitive remedies may be appropriate.

We note that the CMA’s previous (excellent) work on investment consultancy identified similar structural issues, and that actuarial advisory services play an equally critical role in shaping long-term financial outcomes for pension schemes.
We would welcome the opportunity to provide further information or engage constructively should the CMA decide to consider this request.
Thank you for considering this request.