LGPS funding deficit falls by £31bn over 3 years

The Local Government Pension Scheme (LGPS) has cut its funding deficit from £37.2bn in 2016 to £6.0bn in 2019, according to its Advisory Board's annual report.

The total assets of the LGPS increased by 5.9 per cent over the course of 2019 to £289.7bn, with this figure constituting a £73.3bn increase over its assets recorded in the scheme’s last triennial valuation in 2016.

Its liabilities were estimated at £295.7bn, up from £253.6bn in 2016, indicating an overall funding level of 98 per cent compared to 2016’s 85 per cent.

The next triennial valuation of the LGPS is due to take place as at 31 March 2021.

The LGPS said its assets were invested in pooled investment vehicles (66 per cent), public equities (17 per cent), bonds (7 per cent), direct property (3 per cent) and other asset classes (7 per cent).

The Local Authority's return on investment over 2018/2019 was 6.6 per cent, which was reflective of the market conditions during the year and set against the UK Return of 6.4 per cent.

Total membership of the scheme stood at 5.89 million at 31 March 2019, up by 0.6 per cent from the 5.86 million members registered at 31 March 2018.

LGPS stated that the greatest increase in absolute and relative terms was to deferred membership, which increased by 2.1 per cent over the year ended 31 March 2019, however, this was due in part to the reporting of undecided leavers previously not included in deferred totals.

Deferreds made up the largest portion of LGPS membership, constituting 37.5 per cent of total members, while actives and pensioners made up 33.2 per cent and 29.3 per cent respectively.

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