Hymans Robertson gives early insights into 2022 LGPS valuation results

8 September 2022

• Funding level increases expected to be between 7-12%
• Investment returns rise to offset inflation expectations

LGPS funds should expect to see positive improvements in funding level at the 2022 valuation, reveals Hymans Robertson, as it publishes analysis to help LGPS funds better understand their 2022 valuation results. Following a review of whole fund results, the analysis from the leading pensions and financial services consultancy, outlines the common trends which are emerging, while considering the current economic challenges in relation to inflation.

Commenting on the release of the analysis, Robert Bilton, Head of LGPS Valuations at Hymans Robertson, said:

“The 2022 LGPS valuations take place against a background of rising inflation, post Covid and a cost-of-living crisis – a starkly different environment from the previous valuation. However, the big finding to date is a continuation of the recent improvement in past service funding levels, and our early research indicates this to be between 7-12%.

“Our analysis indicates that strong three-year investment returns of 27-28% have been the driver behind the improvement, more than offsetting higher future inflation expectations. Other factors such as salary increase and life expectancy post-Covid have had minimal impact on the funding position. For funds, we would urge cautious optimism as experience tells us that the funding position does not directly drive employer contribution rates – these will start to be reported in the next few weeks.”

Source: Hymans Robertson