Employers’ briefing note: response to surplus

Alongside the note, we participated in an “LGPS Live” webinar, hosted by the LGPS Scheme Advisory Board covering these topics on Wednesday 6 December.

The current surplus environment is relatively unprecedented reflecting the step change in market indicators and assumptions around future investment growth, for which it remains to be seen whether it will translate into practice. This has naturally increased the focus upon LGPS funds’ management of surplus both in the short and longer-term and we will continue to review the basis of our funding monitoring to signal potential for change in measurement. 

The Fund maintains a longer-term funding strategy and is not seeking to review employer contributions prior to the next triennial review, due 31 March 2025. Our approach is consistent with our commitment to continue to support our participating employers to comply with their LGPS duties and to protect the solvency and security, affordability, stability and long term viability of the Fund.  We understand there may be individual employer circumstances which merit a review inter-valuation and these will be considered on a case-by-case basis (read more in the full briefing note).

The Fund regularly reviews our strategy and approach and, as part of FSS/ISS reviews following employer consultations concluding in 2020 and 2023, we sought to utilise funding upside to stabilise or reduce employer contributions and reduce investment risk.

Further consideration will be given to employer contributions in the context of our Integrated Risk Management Framework ahead of, and for implementation at, the 2025 actuarial valuation.

We will provide a further update in the summer of 2024 following a review of the 31 March 2024 position. In the meantime, we continue to value engagement and dialogue from participating employers on this matter, particularly in the context of your own business and budgetary planning.