The Local Government Pension Scheme for England and Wales has seen its deficit drop to £37.2bn, down £9.6bn from £46.8bn in 2013.
In its scheme annual report for 2016, it revealed that as at 31 March 2016, liabilities were £254bn, and total assets were £217bn, giving an overall funding level of 85 per cent. This is an improvement on the 79 per cent funding level reported in 2013 and 2010.
It said its assets were invested in pooled investment vehicles (43.6 per cent), public equities (34.6 per cent), fixed interest/index linked (7.5 per cent), property (7.8 per cent), as well as other asset classes (1.0 per cent). The net return on assets in 2015.16 was 0.1 per cent, which it said reflects the “difficult market conditions”.
The scheme maintained a positive cash-flow position overall as scheme income was lower than total scheme outgoings by £279m (excluding investment income). Over 1.5 million pensioners were paid over the year. Fewer than 91 formal complaints about scheme benefit administration were determined and the Pensions Ombudsman upheld less than 15 per cent.
Commenting, LGPS advisory board chair Cllr Roger Phillips said: “During 2016 the board has been actively developing proposals to further tackle the estimated funding deficit of £37bn (£47bn in 2013) to improve the sustainability of the LGPS and its future funding levels. The next triennial valuation of the LGPS will be as at 31st March 2019.
“During 2014 the Board developed a suite of LGPS pension fund ‘health’ indicators. These were piloted in 2015 with the aim of rolling them out to coincide with the LGPS 2016 triennial valuation. This will enable us to assess and benchmark the overall health of the scheme relative to other large public or private pension schemes, as well as between individual LGPS funds. The results of the pilot form part of this report and administering authorities are encouraged to complete the exercise based on their new, 2016, data.”
LGPS in England and Wales is the largest defined benefit scheme in the country with over 13,000 employers and £5.3m members. Over the year total membership grew by 134,000 (2.5 per cent) to 5.3 million members in 2016 from 5.2 million in 2015 and the number of LGPS employers increased by 2,635 (22 per cent) to 14,435.