Today officially marks the start of the 2022 valuation and the countdown to completing one of your fund’s most important risk management exercises by 31 March 2023. 

The old LGPS cliché of the next valuation arriving just after the previous one has finished doesn’t quite feel true for 2022. Since 2019, the world has faced a pandemic, outbreak of war in Europe and a growing realisation that action needs to be taken in response to climate change. Meantime, in the LGPS, we have seen strong asset returns, increasing inflation pressures, the introduction of increased employer flexibilities and further details about the McCloud remedy. Each one of these will impact the 2022 valuation and we are really looking forward to helping you rise to each challenge.

A lot of funds have already done a considerable amount of work over the last six months to lay the groundwork for a successful year. We have also been busy thinking about the 2022 valuation and you can access our recent webinars, podcasts, thought papers and toolkit via the Hymans Robertson LGPS valuation hub.

However, the tasks and work really start to ramp up now. In amongst all the events of the last two years, we have been working on exciting new developments for the 2022 valuation, which you will see rolled out over the next few months.

The foundation of every valuation is data, and to make your life easier we are rolling out significant updates to our dataPORTAL. These updates will help simplify data validation and offer smart enhancement functionality to automatically complete any gaps in the submission. In response to the ever increasing number of small employers in the LGPS, we are also streamlining the valuation process to reduce the number of data queries and focus our efforts on the issues that matter most. Keep an eye out for our webinar on 4 May to understand more.

If data is the foundation then employer results are the skyscraper built on top – a skyscraper now approaching 1,000 floors for the largest funds! In 2019 we introduced the Valuation Results Portal, an online tool for you to browse all your results and explore different options for employers’ contributions. For 2022 we are enhancing the portal so that you can generate employer results schedules on demand. The schedules themselves will be more informative, including employer-specific life expectancies for the first time. These updates will help you and your employers better understand the valuation results and cope with increasing demands from employers and their advisors and auditors.

Engineers design skyscrapers to withstand the likes of strong winds and earthquakes, and we must ensure that employer funding plans are resilient to future risks. As covered in our recent webinar, one of the big themes of the 2022 valuation will be incorporating climate risk into funding strategy. We know GAD expect every fund to cover it in their valuation report, and the (long-delayed) TCFD consultation from DLUHC is finally expected to land this summer. We have developed a new technique to analyse the potential impact of climate change on future funding outcomes so you can understand your funding plan’s resilience. It’s the first major step in our pledge to incorporate climate risk into all our advice.

No matter which cliché or metaphor you use to describe them, LGPS valuations are a huge and ever more complex task. However, with our continuing investment in technology and development of funding strategy, we are confident these will be the best valuations yet.

If you have any questions about the 2022 valuation, please contact your usual Hymans Robertson contact, or get in touch here.