isio’s new index reveals LGPS is fully funded on a ‘low-risk’ basis

Isio LGPS - Aberdeen City Council LGPS - Avon LGPS - Bedfordshire LGPS - Buckinghamshire County Council LGPS - Cambridgeshire County Council LGPS - Cardiff County Council & Vale of Glamorgan LGPS - Cheshire County Council LGPS - City of London Corporation LGPS - City Of Westminster Council LGPS - Clwyd LGPS - Cornwall LGPS - Cumbria Local Government LGPS - Derbyshire County Council LGPS - Devon County Council LGPS - Dorset County Council LGPS - Dumfries & Galloway Council LGPS - Durham County Council LGPS - East Riding of Yorkshire Council LGPS - East Sussex LGPS - Essex LGPS - Falkirk Council LGPS - Fife Council LGPS - Gloucestershire County Council LGPS - Greater Gwent (Torfaen) LGPS - Greater Manchester LGPS - Gwynedd Council LGPS - Hampshire County Council LGPS - Hertfordshire County Council LGPS - Highland Council LGPS - Isle Of Wight Council LGPS - Kent County Council LGPS - Lambeth LGPS - Lancashire County Council LGPS - Leicestershire County Council LGPS - Lincolnshire LGPS - London Borough of Barking & Dagenham LGPS - London Borough of Barnet LGPS - London Borough of Bexley LGPS - London Borough of Brent LGPS - London Borough of Bromley LGPS - London Borough of Camden LGPS - London Borough of Croydon LGPS - London Borough of Ealing LGPS - London Borough of Enfield LGPS - London Borough of Hackney LGPS - London Borough of Hammersmith & Fulham LGPS - London Borough of Haringey LGPS - London Borough of Harrow LGPS - London Borough of Havering LGPS - London Borough of Hillingdon LGPS - London Borough of Hounslow LGPS - London Borough of Islington LGPS - London Borough of Lewisham LGPS - London Borough of Merton LGPS - London Borough of Newham LGPS - London Borough of Redbridge LGPS - London Borough of Southwark LGPS - London Borough of Sutton LGPS - London Borough of Tower Hamlets LGPS - London Borough of Waltham Forest LGPS - London Borough of Wandsworth LGPS - London Pensions Fund Authority LGPS - Merseyside LGPS - Norfolk LGPS - North Yorkshire LGPS - Northamptonshire County Council LGPS - Northern Ireland LGPS - Northumberland County Council LGPS - Nottinghamshire County Council LGPS - Orkney Islands Council LGPS - Oxfordshire County Council LGPS - Powys County Council LGPS - Rhondda Cynon Taff County Borough Council LGPS - Royal Borough of Greenwich LGPS - Royal Borough Of Kensington & Chelsea LGPS - Royal Borough Of Kingston Upon Thames LGPS - Royal Borough of Windsor & Maidenhead LGPS - Scottish Borders Council LGPS - Shetland Islands Council LGPS - Shropshire County Council LGPS - Somerset County Council LGPS - South Yorkshire LGPS - Staffordshire LGPS - Strathclyde LGPS - Suffolk County Council LGPS - Swansea City & County LGPS - Tayside LGPS - Teesside LGPS - Tyne And Wear LGPS - Warwickshire County Council LGPS - West Sussex County Council LGPS - West Yorkshire LGPS - Wiltshire Council LGPS - Worcestershire County Council

13 September 2023

A new index from Isio benchmarks the aggregate funding position for the 87 funds that participate in the Local Government Pension Scheme (LGPS) in England and Wales, revealing that the LGPS is fully funded on a ‘low-risk’ basis.

Isio’s ‘LGPS Low-Risk Funding Index’ estimates the funding position for the LGPS using the pensions industry standard approach to low-risk funding for past service liabilities, namely using a discount rate based on government bond yields. The Index reveals, as at 31 July 2023, that overall the LGPS in England and Wales is 102% funded.

The funding level has improved dramatically since the most recent LGPS England and Wales triennial valuations were carried out as at 31 March 2022, when funding was estimated to be 67% on the same low risk basis (with a corresponding deficit of over £180 billion) and none of the 87 funds had a funding level of 100% or higher. The improved funding level is primarily due to the significant increase in UK government bond yields, which has resulted in the value of liabilities assessed with reference to bond yields falling dramatically.

  • Isio’s inaugural LGPS (England and Wales) Low-Risk Funding Index reveals an aggregate funding position of 102%
  • This marks a transformational funding swing of approximately £190 billion since 31 March 2022, following a significant rise in gilt yields
  • However, substantial funding differences remain between the participating funds, with some still significantly underfunded
  • The Index suggests that the majority of LGPS funds have scope to reduce employer contributions or shift to lower risk investment strategies
  • Future developments of the Index will reveal funding levels for each individual LGPS fund and track the LGPS’s response to these new market conditions
  • An equivalent Index is under development for the Scottish LGPS funds
Source: isio
Multiple reports with cicle diagram and text

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