Scottish Pensions Fund in Good Shape Despite Market Turmoil
The Government Actuary’s Department (GAD) has wrapped up its latest review of the Local Government Pension Scheme (Scotland) (LGPS) funds. The fresh report, based on valuations as at 31 March 2020, shows the scheme holding firm amidst recent market volatility.
Strong Progress Since 2017
Scottish Ministers tasked GAD under section 13 of the Public Service Pensions Act 2013 to assess the scheme’s compliance, consistency, solvency, and long-term cost efficiency. This is the second such report, following one based on 2017 valuations.
Back in 2017, GAD urged the Scottish Public Pensions Agency (SPPA) to:
- Standardise how pension funds disclose information.
- Create a consistent calculation method to aid comparisons.
The 2020 report shows solid progress on both fronts. Despite a sharp asset value drop just before March 2020, the overall funding level improved.
Scheme Overview: Assets Up, Liabilities Stable
- Total assets climbed to £46 billion in 2020 from £43 billion in 2017.
- Total liabilities stood at £44 billion, using cautious local assumptions.
- The aggregate funding level rose from 102% in 2017 to 104% in 2020 – a clear sign of financial strength.
Recommendations to Keep the Momentum Going
GAD experts made two key recommendations for SPPA to build on this progress:
- Decide what standardised information should be published to help stakeholders access and compare fund data easily.
- Work closely with funds and stakeholders to tackle any inconsistencies and assess the impact of emerging issues uniformly.
GAD actuary Jenny Bullen said: “We have no concerns over the long-term cost efficiency of the funds. The majority of funds in LGPS (Scotland) are in surplus. Our analysis has not raised any concerns around how such surplus is being spread.”
All in all, Scottish public pensions look robust and well managed – good news for scheme members across the country.
