The latest release of Isio’s Low-Risk Funding Index reveals the aggregate funding level for the 87 funds participating in the Local Government Pension Scheme (LGPS) in England and Wales increased from 126% as of 31 March 2025 to a record high of 147% as of 30 September 2025, the midpoint of the 2025 valuation process.
This delivers a full suite of record highs:
• Funding level of 147%, over 20% higher than the previous peak
• Surplus of £147bn, the first time the surplus has been in excess of £100bn
• All LGPS funds (other than the Environment Agency, a closed fund) having a funding level above 100% for the first time
Over the period, higher gilt yields and easing inflation reduced liability values. Total LGPS assets exceeded £450bn for the first time, resulting in a low-risk surplus of £147bn. Of the 87 participating funds, 86 have funding levels of 100% or higher, with levels ranging from 101% to 226% funded.
At the previous actuarial valuation date, 31 March 2022, the aggregate low-risk funding position was 67% and none of the 87 funds had a funding level of 100% or higher on a low-risk basis. As employers participating in the LGPS (largely Local Authorities, Police and Fire Authorities, School Academies, Universities, and Housing Associations) continue to operate under financial pressure, the 2025 actuarial valuation provides a unique opportunity to “reset” contribution levels and review levels of risk exposure, maintaining security within the funds whilst also providing value for money.
Steve Simkins, Partner and Public Services Leader at Isio, says: “At the valuation date of 31 March 2025, our Low-Risk Funding Index revealed a funding level of 126%, demonstrating the strength and security of the LGPS in England and Wales and the need for root and branch reviews of funding strategies to enable employers to benefit from significant reductions to employer contribution rates and de-risking options. With six months to go until the valuation is finalised, the LGPS finds itself in an even stronger position, delivering another full house of record high results. Funding levels, assets and surpluses are all higher than they have ever been.
“As LGPS funds review Funding Strategy Statements (FSSs) and share proposed contribution rates with employers, the outlook should be extremely positive and could enable transformational change for employers in the public sector who are under significant financial pressure. It is normal practice to take into account post-valuation experience. We would encourage funds to take these improvements into account to support a positive approach to the 31 March 2025 valuation. Where decisions have been taken early on in the valuation process, these may need to be reconsidered in light of the 30 September 2025 position.”
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