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LGC View: the facts that form the backdrop

Rachel Dalton
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Scheme assets have performed well, but in an environment of historically low gilt yields and rising life expectancy, deficits have grown faster

Local government pension scheme valuations show that individual deficits have increased by a figure at least in the tens of millions of pounds.

Scheme assets have performed well, but in an environment of historically low gilt yields and rising life expectancy, deficits have grown faster. Funding ratios have either remained around 75%, or moved up or down by single-digit percentage point sums.

This means employers are on the whole forced to pay more into schemes per year in order to stick to repayment plans – or extend their repayment periods to keep contributions from shooting up.

LGC collated the data presented in this special feature from the headline figures reported by the funds themselves. It is intended as a rough illustration of how the LGPS has fared. It is not intended to be used for direct and forensic comparison. Although it is difficult to compare one fund with another, because actuarial approaches and data standards vary between them, our research shows deficits growing.

This forms the backdrop to local government minister Brandon Lewis’s efficiency drive. In its latest consultation, the Department for Communities & Local Government has called for collective investment vehicles to save on fund management fees, and clearer and more comparable investment and actuarial data, to improve transparency.

After all, it seems pointless to continuously pump more money into schemes to cut deficits while potentially ‘wasting’ money on expensive investment management fees.

 

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