2022 Valuations
Executive summary
Funding level
Improved from 98% at 2019 to 107% at 2022 (on local funding bases) with all Funds reporting an improvement
Deficit
Improved from a deficit of £5.9bn at 2019 to a surplus of £22.1bn at 2022 (on local funding bases)
Membership
Total count of members increased from 6.2m at 2019 to 6.6m at 2022
Average primary rates
Increased from 18.6% of payroll p.a. at 2019 to 19.8% of payroll p.a. at 2022 (at whole Fund level)
Average total contribution rates
Decreased from 22.9% of payroll p.a. at 2019 to 21.1% of payroll p.a. at 2022 (on an equivalent whole Fund level)
Allowance for McCloud
Across the Funds analysed, the cost of McCloud was estimated to be £1.6bn (0.5%) of liabilities on a local funding basis.
All LGPS Funds saw an improvement in funding position, largely driven by strong asset performance in 2020/21 which carried through to 31 March 2022, and deficit contributions paid by employers over the intervaluation period. As at 31 March 2022, the total funding level across the 85 Funds analysed was 107% which corresponded to a surplus of £22.1bn. Average total contribution rates decreased from 22.9% p.a. to 21.1% p.a., although primary rates generally increased. Therefore, deficit contributions (i.e. secondary contributions) were generally reduced to maintain stability of contributions. We continue to see participating employers under cost pressures so maintaining rates was welcome.
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1. If comparing these figures to the 2022 Scheme annual report published by the Scheme Advisory Board you will notice that there are some minor differences and there are a number of reasons for this including that this analysis includes only 85 Funds, some of the treatment of benefits may have been calculated slightly differently i.e. membership counts. Some of the 2019 comparatives may also be different to previous reports where they have been recalculated to be based on the same Funds used in the 2022 analysis.
Employer Engagement
Due to the recent falls in gilt yields as well as the amendments made to the LGPS Regulations in September 2020 which introduced new employer flexibilities, we have seen a further increase in engagement by employers looking to understand their obligations to the LGPS. An increasing number of Funds undertook employer covenant reviews as part of the valuation process. This helps Funds to look at the appropriateness of the contributions being set and the integration of employer covenant risk, investment strategy risk and funding risk in a similar way to what we are seeing in the private sector.
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