Rob Bilton: The LGPS has struck a balance between affordability now, and stability in the future
The headline size of Local Government Pension Scheme (LGPS) assets and the idea that the scheme is sitting on large, easily distributable surpluses misses the reality of what the latest 2025 valuations actually show, Hymans Robertson says.
In a briefing note on the 2025 LGPS valuations, the consultancy said the latest results showed a scheme that has performed well through a period of exceptional economic uncertainty – noting a number of positives, including a reduction in employer contribution rates.
But it said that, while assets in LGPS schemes had risen from £364bn in 2022 to £402bn in 2025, these absolute figures alone were "not a meaningful measure of funding strength".
Hymans Robertson head of LGPS actuarial Rob Bilton said: "Whilst in absolute terms the LGPS holds more assets than ever before, the amount of assets per pound of benefit owed to members has fallen between the 2022 and 2025 valuations.
"However, the LGPS has acknowledged higher future investment return expectations at 2025 and struck a balance between affordability now, and stability in the future."
Bilton noted a recent survey of local authorities participating in the LGPS revealed that engagement between funds and employers has been extensive – with 89% of respondents saying there was opportunity to engage with the LGPS fund to discuss, understand and ask questions about the contribution rate decision-making process.
The same survey found that nearly all the authorities (96%) also said they are comfortable with their 2025 valuation contribution rate, which is expected to fall by, on average for the whole scheme, around 4% to 5% of pay.
Bilton said: "Our briefing note covers the key themes of the 2025 LGPS valuations in England and Wales, and it points to a scheme doing its job well – delivering adequate and fair benefits for seven million members in the UK with high levels of engagement, and affordability, for its 20,000+ participating employers.
"As the results fully emerge across the entire scheme, we'll fully explore the underlying drivers for the outcomes including variations between the priorities of funds and employers, and the stress‑testing undertaken to ensure results remain robust over the long term."
