The Government Actuary’s Department (GAD) has completed a review of the local actuarial valuations of funds in the Local Government Pension Scheme Scotland (LGPS Scotland).
Scottish Ministers appointed GAD to report under section 13 of the Public Service Pensions Act 2013. This is the second formal report for LGPS Scotland, based on valuations as at 31 March 2020. The first report related to valuations as at 31 March 2017.
Section 13 requires the Government Actuary to report on whether four key aims - compliance; consistency; solvency; and long-term cost efficiency - are being achieved.
In the 2017 report GAD had recommended the Scottish Public Pensions Agency (SPPA) should consider how funds disclose information in a standard way and develop a basis for standardised calculations for comparative reasons.
In the 2020 report, it noted "good progress" in relation to both recommendations. It also noted the aggregate funding level had improved despite a sharp drop in asset values immediately before the valuation date.
The review also found that LGPS Scotland appeared to be in a "strong financial position" as at 31 March 2020 - noting that total assets had grown in market value from £43bn in 2017 to £46bn in 2020.
It said liabilities stood at £44bn as at 31 March 2020 and aggregate funding levels on prudent local assumptions had improved from 102% in 2017 to 104% in 2020.
In its report, GAD set out its findings against the four aims and made two recommendations - that the SPPA should consider the content and where future standardised information should be published, to enable stakeholders to access and compare funds accordingly; and engage with funds and other stakeholders to consider the impact of inconsistency.
GAD actuary Jenny Bullen, co-author of the report, said: "We have no concerns over the long-term cost efficiency of the funds. We note the majority of funds in LGPS (Scotland) are in surplus. Our analysis has not raised any concerns around how such surplus is being spread."