The improvement is due to an increase in UK Government bond yields which reduces the value of low-risk liabilities, partially offset by small reductions to asset values. Of the 87 participating funds, 55 have funding levels of 100% or higher, with levels ranging from 67% to 157% funded.
The results show that funding levels for LGPS funds and their employers remain consistently much higher than 31 March 2022 levels, which were used to set funding and investment strategies that may no longer be appropriate under current conditions.
For the first time, results for each of the 87 participating funds have been released on a named basis, allowing funds to compare their relative funding positions. The analysis also sets out the comparative position as at the previous actuarial valuation date of 31 March 2022, demonstrating the significant fund-specific improvements when assessing liabilities on a low-risk funding basis.
Steve Simkins, partner and public services leader at Isio, says: “Employers participating in the LGPS continue to struggle to meet ongoing costs and their excessive pensions contributions represent a large proportion of these costs. Whilst employers in Scotland are being offered immediate reductions as part of their 2023 actuarial valuation exercise, those in England and Wales are yet to see similar widespread action taken meaning that their contributions will continue until 2026.
“The Autumn Statement failed to provide local authorities with additional funding, further strengthening the case for a review of pensions contributions as funding levels continue to rise as essential local services face reduced funding and/or closure. We urge the Department for Levelling Up, Housing and Communities and the LGPS Scheme Advisory Board, and their Surpluses Working Group, to consider the challenges faced by local authorities and the opportunities available to help.
“The 31 October 2023 results for our Low-Risk Funding Index suggest further improvements to funding levels over the month of October and, for the first time, participating funds are able to view where they rank relative to others. The results demonstrate the significant changes in market conditions since the last actuarial valuation of 31 March 2022 and the opportunities available to offer flexibility to their employers who are struggling financially.”
Individual Fund Valuations 2022 table
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