The LGPS in 2021-22
Provisional performance figures for 2021/22 from PIRC's Local Authority Universe show estimated average returns across its LGPS members (63 funds with an aggregate value of almost £250bn) of around 8.6% for the year.
The economic consequences of Russia’s illegal invasion of Ukraine, which is above all else a human tragedy, meant that investments reduced in value through the final quarter of 2021-22. However, due to stronger performance at the start of the year the total value of the LGPS in England and Wales at the end of the year was £369bn, from a starting point of £342bn.
LGPS assets were invested in pooled investment vehicles (67.3%), public equities (11.9%), bonds (4.6%), direct and pooled property (7.7%) and other asset classes (9.7%). Between 2021 and 2022 there were relatively small changes in asset allocation most likely resulting from differential market movements and a continuation of existing strategies towards greater use of alternatives. Pooled investment vehicles are also an increasing proportion, largely as a result of the establishment of LGPS investment pools.
The Public Service Pensions and Judicial Offices Act 2022 gave powers for implementation of McCloud remedy and the Board has been fully engaged in the development of the specific solution for the LGPS.
In October 2021 the Government published amending directions for completion of the 2016 valuations, which had been paused since 2020. These reflected the Government’s policy intention that the entire impact of the McCloud remedy should be taken into account in the 2016 scheme valuations. Following this approach, costs remained within the 2% “corridor”, although that decision is still the subject of legal action, brought by a number of public sector unions.
The Pension Schemes Act 2021 was also passed to allow for the creation of pensions dashboards, including allowing the Money and Pensions Service to provide their own dashboard. It also granted powers to make regulations requiring climate risk reporting by private sector pensions schemes.
The announcement that CIPFA would disband its Pensions Panel led to the Board taking action to ensure that the important areas of work that the panel had undertaken, including production of statutory guidance around pension fund annual reports, funding strategy statements and investment strategy statements, could continue. It was agreed that the Board and CIPFA would establish a joint Compliance and Reporting Committee to take on the Panel’s remit. The Board approved an uplift in the budget, and hence the statutory SAB levy paid by funds, to enable the secretariat to recruit an additional member of staff to support the new committee, which commenced its work in April 2022.
There was also progress in the year on the cost transparency project, with some amendments to the Code of Transparency which were the subject of consultation with asset manager signatories. More managers signed up to the Code and usage of the Board's Code of Transparency reporting system continued to increase, with improved levels of compliance.
The individual underlying annual reports and audited financial statements of each individual LGPS pension fund in England and Wales for each financial year ending 31st March from 2013 onwards can be found on the fund annual reports page of this website.