Funding

The LGPS is a funded public sector pension scheme. This means each Fund holds assets (contributions and investments) to pay members benefits. This is different to unfunded public sector schemes where benefits are paid from the Treasury.

These assets are used to pay the pension benefits to your members. Together, the pension benefits built up by your members make up the liabilities.

The difference between the value of the assets and liabilities is your funding level. We track the funding level of each employer’s pension pot. This is to make sure there are enough assets to meet the retirement benefits built up by both current and former members.

We assess your funding position individually every three years. We work with the Fund’s actuary to assess:

• what we think the total value of the pension liabilities already built up will be and
• whether we think you’re likely to have enough assets to cover those liabilities.

If the value of your assets is less than the assumed value of your liabilities, your funding position is in deficit. If the assets are more than the pension liabilities, your position is in surplus.