What is the purpose of the valuation?

The purpose of the valuation is to review the financial position of the Fund and to set appropriate contribution rates for each employer in the Fund for the period from 1 April 2026 to 31 March 2029 as required under Regulation 62 of the Local Government Pension Scheme Regulations 2013 (the Regulations).

The valuation shows a decrease in the overall funding position. 123% in March 2022 compared to 117% in March 2025.

Primary rate contribution rates for most employers will reduce from those set at the previous valuation in 2022, mainly due to an increase in the future expected returns, i.e. an increase in the discount rate from 4.6% at 2022 to 5.0% at 2025. The whole fund primary contribution rate is 17.3% compared to 20.2% at the previous valuation.

Most employers will see a slight decrease in their funding level, although this will vary between employers due to the employer’s own experience, levels of contributions paid over the inter-valuation period and potential changes in funding approaches relating to their assumed risk to the Fund. For those employers seeing a drop in their funding position, but remaining in surplus, they may see their negative secondary contributions falling closer to or reaching 0%.

For some employers with significant surplus, and who are expected to exit the Fund soon, it may be the case that their total contribution rate will be set to 0%.

 

Have you seen your interim contribution report and Funding Strategy Statement?

All employers should now be in receipt of their ‘Valuation employer results schedule’. The purpose of this document is to provide a summary of the preliminary results of the actuarial valuation as of 31 March 2025 in relation to the Employer’s individual funding position.

In addition, all employers should now have sight of the draft ‘Funding Strategy Statement’ (please let us know if you haven’t).  The purpose of this is to:

·       Establish a clear and transparent fund-specific strategy that will identify how employers’ pension liabilities are best met going forward.

·       Support the desirability of maintaining as nearly constant a primary contribution rate as possible, as defined in Regulation 62(6) of the Regulations.

·       Ensure that the regulatory requirements to set contributions to meet the future liability to provide Scheme member benefits in a way that ensures the solvency and long-term cost efficiency of the Fund are met; and

·       Take a prudent longer-term view of funding those liabilities.

What happens next?

There will now be a period of consultation with employers from 18 November 2025 to 9 January 2026.

We ask that all employers provide feedback (whether they are happy or otherwise).

Once the consultation period has ended, feedback will be analysed and both the funding strategy statement and valuation report will be finalised and approved by the Pensions Committee on the 26th of February 2026. A full valuation report will then follow by 31 March 2026, which will provide final details of the valuation method, assumptions, and results of the valuation.

Please email [email protected] if you have any questions.