On the go: Forty-six per cent of Local Government Pension Scheme funds expect to be more than 100 per cent funded at their next triennial actuarial valuation, according to new research.
The survey conducted by asset manager Alpha Real Capital, which polled 100 LGPS fund professionals, showed that 75 per cent of respondents ranked increasing or maintaining returns among their highest priorities post valuation.
Cash flow management came in second, with 66 per cent of professionals ranking this as high priority, while 60 per cent cited their intention to derisk/diversify away from traditional assets as a top objective.
Furthermore, roughly 50 per cent intended to focus on environmental, social and governance risks as a priority. Investing to effect “social impact locally and nationally” and investing with the “environmental impact” in mind scored similarly in terms of prioritisation, the manager said.
The results of the next LGPS triennial valuations, conducted in March, are expected in early autumn and new contributions will come into force from April 2023.
The asset manager noted that the period after the valuation date has witnessed significant moves in interest rates, inflation and equity markets, “however, it is widely expected that LGPS fund balance sheets have been resilient”, it said.
Alpha Real Capital client solutions associate director Stuart Hanson said: “Our research shows that many LGPS fund professionals are optimistic about the valuations of their funds and have a clear view of the goals and challenges they face.
“Assuming the final valuation results align with expectations, this would represent an excellent outcome for LGPS fund professionals in what has been a very difficult period for investors.”
