Successfully reducing an LGPS valuation deficit

Background

Our client, a University, faced a significant financial challenge due to a proposed increase in Local Government Pension Scheme (LGPS) contributions for their professional service staff. The contributions were set to rise from £2 million a year to £9 million year, following a change in the Fund’s treatment of employers without tax-raising powers.

Our approach

To address this challenge, we adopted a comprehensive and collaborative strategy, leveraging our specialist expertise:

• Comprehensive engagement support: We supported the University throughout the engagement process with the Fund, participating in calls, in-person meetings, and drafting formal correspondence.
• Collaborative efforts: We facilitated a unified approach by coordinating with other affected employers, ensuring a collective and impactful engagement with the Fund.
• Actuarial analysis: we presented robust actuarial arguments demonstrating that the revised assumptions were too cautious.
• Benchmarking insights: we offered comparative insights on how the Fund’s approach differed from other funds managing similar employers.
• Regulatory references: we cited relevant regulations and practices from comparable bodies, including private sector pension regulators and insurance companies.

Impact

Our client successfully agreed a reduction of contributions back to £2 million a year.

In addition, we have also seen significant improvements to the 2025 LGPS valuation process, with better communication and more timely engagements.