Scottish Local Government Pension Scheme in Strong Shape, Says Government Actuary
Government Actuary’s Department Review Unveiled
The Government Actuary’s Department (GAD) has completed a thorough review of Scotland’s Local Government Pension Scheme (LGPS) funds. Appointed by Scottish Ministers under Section 13 of the Public Service Pensions Act 2013, this marks the second formal report, covering valuations as at 31 March 2020. The first report examined valuations from March 2017.
Key Aims: Compliance, Consistency, Solvency, Cost Efficiency
GAD’s role is to assess whether the scheme meets four critical goals:
- Compliance with regulations
- Consistency across funds
- Solvency and financial health
- Long-term cost efficiency
Progress Since 2017
Following recommendations in 2017, GAD urged the Scottish Public Pensions Agency (SPPA) to standardise fund disclosures and develop uniform calculation methods for better comparability.
The 2020 report highlights solid progress on both fronts. Despite a sharp dip in asset values just before the valuation date, the overall funding level actually improved.
Strong Financial Position at a Glance
GAD’s latest findings confirm the LGPS (Scotland) is financially robust as of March 2020:
- Market value of total assets rose from £43 billion in 2017 to £46 billion in 2020
- Total liabilities stand at £44 billion, based on cautious local assumptions
- Aggregate funding level improved from 102% in 2017 to 104% in 2020, signalling a surplus
Recommendations to Keep Momentum Going
The report offers two key suggestions for SPPA:
- Decide what standardised information should be published and where, to boost transparency and help stakeholders compare funds easily
- Work closely with funds and stakeholders to tackle inconsistencies and consider a unified approach for emerging issues
“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,” said GAD actuary Jenny Bullen, co-author of the report.
