Local Authority Pension Funds (LGPS) are continuing to grow both their assets and fund membership, new research reveals.

A new study, commissioned by State Street Corporation, found between 2013 and 2015 the number of active LGPS members increased from around approximately 1.7m people to 2.1m.

Alongside the increase in membership, State Street discovered contributions to the pension funds were also on the rise.

There was a 31% increase in from local government and a 6% increase from members.

Nick Wright, head of UK, Middle East, Africa, Netherlands and Nordics at State Street said LGPS member funds were facing ‘huge challenges’ but overall were ‘positioned well with the asset pooling project.’

‘We can see that they are investing a lot of time and energy in ensuring they understand the operational and regulatory challenges ahead of them, and are developing strong strategies,’ Mr Wright added.

State Street also carried out an additional survey of 400 pension professionals, which found the sector was facing ‘significant challenges’ globally.

Four out of ten (40%) respondents claimed it’s getting harder to ensure they don’t breach local regulatory limits on exposure to specific asset classes.

More than six out of ten (61%) reported looking to insource more risk management tasks to improve operations and efficiency levels, and 53% said they intended to carry out more investment related functions in-house.

Over half (51%) are looking to increase the autonomy of their investment function, while 61% said they intended to adjust the balance of responsibilities between their fund’s board and management.

Nearly half (48%) are looking to change their process of recruiting new board members.

Andy Todd, head of UK pensions and banks, Asset Owner Solutions at State Street said: ‘As pension funds come under pressure to deliver better long-term returns to members at lower costs, it’s clear that pooling knowledge, as well as assets, is not solely a cost-saving measure, but also as an important means of developing new capabilities and opening up fresh opportunities.’