2022 LGPS valuation results revealed

• LGPS has improved its already strong funding position.

• Many administering authorities have been able to offer contribution rate relief to employers.

• The outlook for the long-term sustainability of the LGPS in England & Wales is robust.

LGPS funds in England and Wales experienced an extremely strong 2022 valuation, reveals Hymans Robertson, as it publishes its report LGPS 2022 Valuation: The Big Picture. The report’s aim is to help LGPS stakeholders better understand the funding position of the LGPS and to put individual fund results into context. Following a review of whole fund results, the analysis from the leading pensions and financial services consultancy, outlines the common trends that emerged in relation to contribution rates and funding positions.

Commenting on the findings of the analysis, Robert Bilton, Head of LGPS Valuations at Hymans Robertson, said:

“The 2022 LGPS valuations conclude in a very different environment from which they started with inflation, a worldwide pandemic and a cost-of-living crisis all featuring within this triennial period. Prior to valuation, there was an expectation that the funding position of the LGPS would improve, which has proved to be correct. Higher short-term inflation has been more than offset by better than expected investment returns. Our analysis indicates that the average increase in fund asset values was 27.5%, with some individual funds well over 30%.

“For funds, the delicate balance between security, affordability and stability remains a constant consideration when setting contribution rates. Overall, the average employer contribution rate has reduced at 2022, down by 1.1% of pay to 20.8% of pay. Our analysis gives cause for optimism that the outlook for the long-term funding sustainability of the LGPS is robust, not least due to the hard work that has taken place across all funds over the last decade and longer. Whilst the good news is welcome, the hard work doesn’t stop, and it is important that funds use the next two years to continue to systematically review their risks to keep them in the best place possible ahead of the valuations in 2025.”

A copy of Hymans Robertson’s analysis can be accessed here.