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

  Isio   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 East Scotland   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

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
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