Financial Performance 

In line with other UK pension funds, each LGPS fund undertakes a local actuarial valuation every three years. The last triennial valuation of the LGPS local assets and liabilities was at 31st March 2022 (see below) and the next one will be as at 31st March 2025. The results of the 2022 valuations are available on this website, with all fund annual reports as well as a scheme-level summary report published. 

There are also separate four-yearly scheme-level valuations that are conducted under directions issued by His Majesty’s Treasury and undertaken by the Government Actuary’s Department. These take place across all the public service pensions schemes, including the LGPS. The results of this valuation of the Local Government Pension Scheme (England & Wales) as at 31 March 2020 were published on 29 February 2024. 

2022 Actuarial Valuation 

*Figures restated in 2019 & 2022 valuations.  

Development of LGPS funding position 

Funding position data as at 31 March 2024 was collected from 69 annual reports, with an average of 108 per cent. When weighted by assets under management, the average funding position of the 69 funds was 113 per cent. 

Aggregated information 

We have the following aggregated information from the annual report and audited accounts of the LGPS funds as of 31st March 2024 showing the development of the LGPS. Importantly, this notes that active membership is maintained and contribution payments continue to exceed benefit payments which is consistent with the scheme remaining open to new entrants. 

Income and Expenditure, year to 31^st March 2024 

Cashflow before investment income 

When looking at the gap between contribution income and benefit payments (i.e. excluding investment income), cashflow levels between funds ranged from -£324m to +£120m with the average being -£26.1m. 67 out of 86 (78%) funds reported a negative cashflow on that basis. This compares with a range of cashflow positions between funds in 2023 of -£382m to +£24m and an average of -£33.8m, with 64 funds in a negative cashflow position in 2023. 

Life expectancy index 

Working closely with the LGPS Scheme Advisory Board, Club Vita have created an LGPS Life Expectancy Index to communicate the evolution of life expectancy amongst LGPS pensioners in a simple and informative way. The Index also provides the Board an early warning signal of material changes in longevity that might impact the affordability of benefits. 

This year’s Life Expectancy Index focuses on the latest available mortality data for LGPS pensioners through to the end of 2023. While it has taken some time for death rates in the UK population to return to ‘typical’ levels following the pandemic, Club Vita’s data driven insights indicate that LGPS pensioners have generally shown greater resilience and that life expectancies of LGPS pensioners are returning to pre-pandemic levels.  

It is important to remember that the Index consists of single data points for men and women, considering only death rates in each particular year. Given the diverse membership and long-term focus of the LGPS, it is important to consider wider longevity trends and the impact they could have on the future life expectancy of different individuals participating in the LGPS. For example, Funds receiving Club Vita’s services have access to longevity analysis that takes account of specific regional and socio-economic factors at the individual member level. 

The Index tracks the life expectancy of E&W LGPS pensioners. The methodology ensures the Index results are objective and reflect the experience of E&W LGPS members. The information does not constitute advice and should not be relied upon or used for any other purpose without the written permission of Club Vita (UK) LLP. 

Recent mortality experience 

General population experience up to the end of 2023 

The pandemic led to a significant number of excess deaths in the UK population, with death counts surpassing ‘typical’ levels by approximately 83,000 in 2020 and 60,000 in 2021. Given a typical year sees around 600,000 deaths in the UK, these figures highlight the profound impact of the pandemic, even with the extensive social distancing measures put in place. While 2022 and 2023 also saw elevated mortality levels, it was notably less severe than the earlier pandemic years of 2020 and 2021.  

LGPS pensioner population experience up to the end of 2023 

The chart below demonstrates the annual progression of the LGPS Life Expectancy Index between 1993 and 2023 for female and male LGPS pensioners in England and Wales (E&W). It measures the years that members are expected to live in retirement for, after reaching the age of 65, based on death rates in that year (referred to as period life expectancy).  

The chart shows that based on the experience of E&W LGPS pensioners, life expectancy in retirement (measured from age 65) has increased from 14.6 years in 1993 to 20.2 years in 2023 for males and from 18.4 years in 1993 to 22.9 years in 2023 for females. 

Emerging insights into mortality levels in 2024 

Early insights show that 2024 mortality levels in the UK population were much closer to pre-pandemic expectations. In fact, they were similar to those in 2019, which marked the lowest mortality rates on record. However, a closer look at different age groups reveals an upward trend in mortality rates among individuals aged under 55. The reasons for this shift require further investigation, but they may be linked to deteriorating lifestyles, diets and the associated increases in obesity and lifestyle-related conditions like diabetes.  

Further analysis on 2024 life expectancies, including specific insights on LGPS pensioner longevity, will be available in our next index. For the latest analysis on post pandemic longevity trends more generally, please visit the Club Vita website. 

LGPS Funds vs general population 

Analysis from the LGPS Life Expectancy Index in 2021, 2022 and 2023 suggests that pensioners are seeing a more pronounced bounce back towards pre-pandemic life expectancies than the general population. This could be linked to socio-economic factors within the LGPS membership alongside the financial buffer that comes with receiving a guaranteed retirement income from an LGPS Fund. 

This phenomenon is not unique to the time since COVID-19. Longevity trends in general (in particular since 2011) have not affected DB pensioners in the same way as the general population and indeed have affected different DB pensioners to differing extents, depending on an individual’s socio-economic status. 

As such, it’s important for LGPS Funds to understand the socio-economic profile and regional concentration of their Fund and understand what this could mean for life expectancies – using population statistics for assumption setting, and risk management, could be potentially misleading. No two LGPS Funds will be impacted to the same extent and in fact, no two employers within a Fund will see the same mortality impacts in relation to evolving longevity trends. 

Club Vita continues to monitor the differing longevity trends of different socio-economic groups across the “Comfortable”, “Making-Do” and “Hard-Pressed” sub-groups of the Club Vita dataset. Essentially, these groups divide the Club Vita DB pensioner data into high, medium and low socio-economic groups which we [Club Vita] refer to as VitaSegments. VitaSegments then enables LGPS Funds and their actuaries to set longevity trend assumptions that reflect the bespoke socio-economic characteristics of the membership, rather than relying on Engalnd and Wales population figures which may not truly reflect the members’ circumstances. 

Applying the England and Wales population trend to a group of pensioners could see future life expectancy underestimated for more affluent pensioners. Underestimating the life expectancy (and therefore the associated liabilities) of higher socio-economic groups is most problematic, as we generally see the majority of a Fund’s liability concentrated on these higher socio-economic groups. 

Consequences for LGPS Funds  

The recent longevity turbulence serves as a reminder that LGPS Funds (and their actuaries) should actively monitor longevity trends to ensure their funding plans remain on track. Understanding the socio-economic profile and regional concentration of the Fund membership is vital, together with a view on whether different drivers of mortality improvements will affect different groups in different ways. These will inform both the current rate of longevity improvement amongst Fund members and views on how that will change over the next 2 or 3 decades. These long-term drivers of longevity have the potential to generate a much more material impact on liabilities than what we have seen over the last few years as a result of the pandemic.  

Once appropriate longevity assumptions have been set, taking account of the specific socio-economic profile and regional concentration of the Fund membership, some LGPS Funds (and their actuaries) use scenario analysis to stress test their long-term funding strategy. A good example of a phenomenon with the potential to significantly disrupt life expectancy is climate change. 

Club Vita’s climate change longevity scenarios take a holistic approach to the impact of climate change on longevity. First published in 2018, they have revised and updated their climate change scenarios to allow for subsequent events and to readily align with other frameworks that may be used in scenario modelling. Their publication sets out the potential impact on future life expectancy and LGPS pension fund liabilities under three scenarios: 

• Sustained stagnation: Global inaction to control the impacts of climate change with limited mitigation actions and policy inertia. 

• Turbulent times: Some adaptation but only accelerates when the impacts (e.g. resource constraints) become much more apparent. 

• Rapid response: Plausibly fast and effective adaptation of behaviours supported by fast development of mitigation actions largely via technology. 

Club Vita are regularly refreshing a suite of scenarios on a wide range of drivers such as healthcare and lifestyle disruption. These scenarios, together with considerations of other risks, such as investment risk, can help pension funds introduce longer term longevity considerations into their risk management framework. 

Club Vita longevity analytics 

In addition to the LGPS Life Expectancy Index, Club Vita provides valuable longevity analytics to the majority of LGPS Funds. This enables Funds and their advisers to understand the evolution of Fund specific longevity. It also means that the longevity assumptions, used to value liabilities at the triennial valuation, can be selected to reflect the specific demographic profile of the Fund’s membership. Funds which don’t currently receive Club Vita longevity analytics are invited to contact Jill Jamieson, Head of Pensions UK at Club Vita.  

Methodology 

The LGPS Life Expectancy Index tracks the life expectancy of E&W LGPS pensioners. The methodology ensures the Index results are objective and reflect the experience of E&W LGPS members. 

The Index is based on period life expectancy from age 65. For each year this is a measure of how long you expect to make pension payments to an average member based on death rates in that year. 

This approach to measuring life expectancy uses only observable, verifiable and avoids any need for subjective assumptions about how life expectancies will change in the future. 

The Index allows changes in life expectancy from year to year, and trends in life expectancy emerging over a number of years, to be clearly identifiable. 

Reliances and Limitations 

• The life expectancy values shown in this chart have been provided by Club Vita to the Advisory Board for inclusion in the Scheme Annual Report. Whilst they can be reproduced, they should not be relied upon or used for any other purpose without the written permission of Club Vita (UK) LLP. 

• Life expectancies are based on the experience of English and Welsh LGPS Funds that have provided data to Club Vita as at November 2024.  

• The life expectancy shown for a particular year is the period life expectancy measured at age 65 - this is based on the exposure and deaths occurring during that year, so does not make any allowance for changes in longevity before or after that year. 

• The life expectancies shown have been calculated from the crude mortality rates of English and Welsh LGPS pensioners contributing to Club Vita’s dataset. 

• Funds contributing data to Club Vita’s dataset provide an extract of their longevity experience data annually. There are some circumstances where Funds are unable to do this on an annual basis and so there may be variability in the number of Funds contributing data to Club Vita from time to time. 

• The life expectancy of an individual LGPS pensioner will depend on many factors, including age, gender, health, wealth, future changes in mortality, etc. and the figures shown here are not intended to represent or predict the life expectancy of any one individual member.  

Life Expectancy Index 

Hymans Robertson 

• This report does not constitute actuarial advice but rather a set of information to support the Advisory Board in communicating the evolution of life expectancy amongst LGPS pensioners. 
• This report has been prepared in line with the principles of the Financial Reporting Council’s Technical Actuarial Standard (TAS) 100: Principles for Technical Actuarial Work.