The LGPS in 2020-21
Not a highlight by any means, but 2020-21 will be remembered for the impact of CoViD-19. In April 2020 we reported that the PIRC provisional LGPS performance report showed the initial impact on investments to be significant but 'not the same magnitude as 2008'.
Provisional performance figures for 2019/20 from PIRC Local Authority Universe show estimated average returns across its LGPS members (62 funds with an aggregate value of almost £180bn) of around -5% for the year.
Investments recovered most, and in some cases all, of those initial losses during 2020-21 with the total value of the LGPS in England and Wales finishing at £342bn from a starting point of £276bn.
LGPS assets were invested in pooled investment vehicles (66.2%), public equities (13.4%), bonds (4.6%), direct and pooled property (7.1%) and other asset classes (8.7%). Between 2020 and 2021 there were relatively small changes in asset allocation resulting from differential market movements rather than cash flow, with pooled investment vehicles increasing in proportion largely as a result of the establishment of LGPS investment pools.
The pandemic had a much greater impact on governance and administration with authorities having to restructure the service for homeworking and remote meetings. In April 2021 the SAB surveyed authorities about service resilience, followed by another on cash flows and a further survey on governance in May 2020.
It was and continues to be a difficult time but thanks to the dedication, flexibility and hard work of all those involved the scheme coped admirably with pensions paid accurately and on time and regulatory requirements fully complied with.
The scheme continued to grow with an increase of 66,624 members from 6.16 m to 6.23 m.
On the legal front the SAB issued a summary on the Supreme Court ruling on the boycotts case in May 2020, a judgment that is still having a direct impact today in terms of boycotts legislation and a wider impact on the scope of governance.
October 2020 to February 2021 saw the arrival, dispute, switching off and finally revocation of the public sector exit payments regulations (the £95k cap) due at least in part to the legal advice obtained by the SAB.
The year also saw the Pension Schemes Bill becoming an Act giving powers for legislation on the pensions dashboard, continued McCloud consultations, DWP launching a consultation on climate risk reporting and HM Treasury consulting on changes to normal minimum pension age.
Finally the SAB published the Good Governance final report in February 2021 which remains with ministers for consideration
The individual underlying annual reports and audited financial statements of each individual LGPS pension fund in England and Wales for each financial year ending 31st March from 2013 onwards can be found on the fund annual reports page of this website.