The Local Government Pension Scheme (LGPS) cut its deficit by £31bn over the course of three years, its latest annual report shows.
The Scheme Advisory Board (SAB) reported today (22 May) that scheme assets had risen to £289.7bn on an actuarial basis as of 31 March 2019, compared with £216.4bn in 2016. Liabilities in March last year were recorded at £295.7bn, up from £253.6bn.
With the combined deficit for all 89 English and Welsh LGPS funds falling from £37.2bn to £6bn, the funding level also improved from 85.3% to 98.0%, the SAB said.
In the 2018/19 year alone, the scheme recorded a 5.9% increase in asset values, aided by a 6.6% return on investment against a UK return benchmark of 6.4%.
Around two-thirds of assets were allocated to pooled investment vehicles, followed by 17% in public equities, 7% in bonds, 3% in direct property, and 8% in other asset classes. These included 2.4% in cash deposits. Most significantly, the allocation to equities had dropped by 11.6 percentage points between 2017/18 and 2018/19, although much of this was moved to the pooled investment vehicles.
Overall, the scheme maintained a cashflow positive position overall, with £15.2bn income compared to £12.9bn total expenditure. At £9.5bn, employer contributions were £2.3bn lower than in 2017/18, although similar to the £9.3bn paid in 2016. Investment management costs fell by £230m to around £500m.
A further 37,000 members were brought into the scheme during 2018/19, resulting in a total membership of 5.9 million people. Of these, two million members are active, while 2.2 million are deferred and 1.7 million are pensioners.
The scheme's next triennial valuation will be dated 31 March 2021.
The easing of the UK’s lockdown could mean a steady rise in defined benefit (DB) transfers, as the ‘lockdown effect’ on the sector weakens, research from Lane Clark & Peacock (LCP) finds.
As new figures from the Pension Protection Fund show the shortfall of final salary schemes in deficit grew to £256.4bn during April, Joe Dabrowski examines how the superfund structure could help…if only we had one.
Pension schemes and life insurers should be prepared for a modest change to their assumptions for mortality rates in the post-Covid-19 world, an academic study suggests.
Lane Clark & Peacock (LCP) has called out HM Revenue & Customs' (HMRC) tax policy on flexible drawdown as "unacceptable", claiming it could lead to draconian tax penalties during Covid-19.
30 years after the infamous Barber judgment, Tom Yorath looks at how the GMP equalisation problem has progressed against advances in technology