On behalf of the Shadow Scheme Advisory Board I am delighted to be able to present the second Annual Report for the Local Government Pension Scheme (LGPS) in England and Wales. The LGPS is one of the largest defined benefit (DB) schemes in the world and is the largest DB scheme in England and Wales, with over 10,000 employers, 5m members and assets of £190bn.
The aim of this Annual Report is to provide a single source of information about the status of the LGPS for its members, employers, and other stakeholders. Continually improving key information about the Scheme as a whole is one of the top priorities of the Board. This report aggregates information supplied in the 91 fund annual reports, as at 31st March 2014, and for the first time presents consolidated information about the LGPS from its statutory auditors as well as the Pensions Ombudsman.
To navigate the Annual Report, please use the menu to the right of this page, or the hyperlinks.
Here are some key LGPS highlights for 2014:
- The total membership of the LGPS grew by 243,000 (4.9%) to 5m members in 2014 from 4.8m in 2013 and number of LGPS employers increased by 1,331 (14%) to 10,671.
- The total assets of the LGPS increased by £11.2bn (6.0%) from £180.9bn to £192.1bn. These assets were invested in pooled investment vehicles (41.1%), public equities (38.5%), fixed interest/index linked (7.9%), property (6.6%), as well as other asset classes (5.7%).
- The net investment return on the scheme assets (after fees) was +5.9%. This was +2.6% greater than a corporate pension fund peer group, which is based on 109 Funds (covering 60% of UK corporate funds) with a total market value of £327bn.
- The scheme continued to remain cash-flow positive. Scheme income exceeded scheme outgoings by £3bn.
- The funds all received unqualified external financial audit certificates from the Scheme's external statutory auditors.
- Over 1.5m pensioners were paid over the year. Less than 200 formal complaints about scheme benefit administration were determined and less than 15% were upheld by the Pensions Ombudsman. Overall the LGPS has had relatively few upheld complaints.
As at the 31st March 2013, the LGPS liabilities were estimated at £227bn indicating an overall funding level of 79%. During 2014 the Board has been actively developing proposals to tackle the estimated funding deficit of £47bn to improve the sustainability of the LGPS and its future funding levels. The next triennial valuation of the LGPS will be as at 31st March 2016.
During 2014 the Board has developed a suite of LGPS pension fund ‘health’ indicators. These are being piloted in 2015 with the aim of using them as part of the LGPS 2016 triennial valuation. This will enable us to assess and benchmark the overall health of the scheme relative to other large public or private pension schemes, as well as between individual LGPS funds.
I would be pleased to hear your views on this our second Annual Report (these should be sent to Liam Robson). The Board is keen to ensure we add to the Report and that the work underlying our compilation and analysis is ultimately recognised through UK, EU and global awards for excellence.
Chair of the LGPS Shadow Advisory Board