A better future for the LGPS
Employer diversity: one size doesn’t fit all
02 Nov 2017 - Estimated reading time: 5 minutes
What is the employer experience in the LGPS? This is the first in a series of briefing notes where we consider some of these experiences, how they affect the employers concerned, and what solutions might be available for funds to secure better outcomes for everyone.
Prompted by Section 13 of the PSPA, DCLG, assisted by the Government Actuary’s Department, are doing LGPS-wide analysis comparing the funds. The Scheme Advisory Board is taking a different route and considering LGPS issues on a sector-by-sector basis. Rather than duplicate the work being done elsewhere, and on the back of the 2016 funding valuations, Hymans Robertson asks a key question: what is the employer experience in the LGPS?
What did we find across the LGPS?
We carried out a unique analysis across nearly half the LGPS in England & Wales (advised by Hymans Robertson), which looked at these different employer experiences. This showed for instance that:
- 1% of employers account for more than 60% of the assets and liabilities in the LGPS, whereas 90% of employers account for less than 10%;
- Even ignoring the most extreme employers, funding levels range from 60% to 140%, a much broader range than that shown in the GAD Section 13 analysis;
- Academy schools make up 1/8 of the active membership but only 1/20 of the assets;
- Colleges have a maturity measure (liabilities divided by payroll) of 5.5, vs 8.5 for councils;
- Larger councils such as counties, unitaries and metropolitans, have an average cashflow position of -1% of assets, whereas their District and Borough neighbours have -5%.
To read our full insights and case study, download our publication.