Understanding the 2025 LGPS valuation process
LGPS employers in England & Wales are awaiting the 31 March 2025 LGPS valuation results. What’s the process for this and what can employers expect?
The broad timeline for the valuation process is set out below.
The key time for employers to engage with funds is the last quarter of 2025 and first quarter of 2026. Funds want more engagement from employers, and the outcome will drive your contributions from April 2026 to March 2029, so get involved!
Valuation results are expected to show a very significant improvement in funding positions since 31 March 2022. Funding updates we’ve seen from a range of funds are typically showing full funding, even on cessation bases. This won’t necessarily translate through into significant reductions in contribution levels though due to stabilisation mechanisms used by funds, so engage early to understand your options.
What LGPS employers should be doing now
Here are some top tips from us to help you make the most of a strong funding position:
1. Check your current funding position
Consider if crystallising the current funding position is achievable and desirable. Contributions are typically set assuming ongoing participation in the fund, and therefore build in the risk of surpluses reducing in the future, thereby meaning current surplus levels are not fully recognised. Exiting the fund or shortening the participation period enables better utilisation of current surplus levels.
2. Consider the impact of time horizons on costs
Check the time horizon being used by the fund. With strong funding positions, longer time horizons can increase cash costs because the risk of returning into deficit over the time horizon increases. Shorter time horizons could reduce your cash costs, and may be justifiable depending on your membership profile.
3. Understand exit credit policies and over-funding risks
You might be more relaxed about continuing to pay contributions into a well funded arrangement if you have certainty that any over-funding will be refunded with an exit credit payment on eventual cessation. But funds have discretion over this, so understanding how they will apply this discretion in your circumstances is crucial. If you don’t have certainty that you will recover any over-funding, then it’s even more important that you don’t overpay contributions now.
Act early, engage strategically
The 2025 LGPS valuation presents a critical opportunity for employers to take stock of their position and make informed, strategic decisions. With most funds in strong funding health, now is the time to actively engage with your fund.
Don’t wait until decisions are made for you, proactive involvement can ensure your voice is heard and your contributions are aligned with your goals.
Make the most of this valuation cycle, whether you’re exploring surplus utilisation, reviewing time horizons or need clarity on exit policies. We will help you navigate your options with confidence.
