2025 valuation
How we set your contribution rates
Setting new contribution rates for each employer is a significant exercise. Your final contribution rates are the result of actuarial advice, analysis, discussions and policy decisions.
Funding strategy
Our funding strategy statement (FSS) guides how we set your contribution rates. It explains how we manage the long-term funding needs and risks in the LGPS. We also need to balance the requirements to ensure:
- solvency of the Fund
- contribution stability
- and long-term cost efficiency.
Here’s a summary of the main decisions made about our funding strategy.
Financial and demographic assumptions
To work out each employer’s funding needs, we must make assumptions about how your assets and liabilities might change in the future.
In January 2025, we reviewed how we set assumptions using analysis and advice from our Fund actuary. The Pensions Committee agreed this in March 2025. We’ve included the final assumptions in appendix E of the FSS.
Employer funding strategies
To help us balance the needs of different employer types, we looked at the funding strategy in stages. This allowed us to recognise the different nature, risk profile, and funding needs of each employer type:
Local authorities, academies and further education (FE) colleges:
This review took place in early 2025. It covered the:
- funding target
- recovery period
- likelihood of meeting the target (prudence)
- contribution stability measures
- how the strategy links to the Fund’s investment approach.
We discussed the findings at the March 2025 Pensions Committee. The Committee approved the policies for consultation.
Academies (pooling review):
We reviewed the funding strategy for academies and FE colleges in September 2024. We also took into account the Department for Education guarantee. Our review focused on options for managing funding risk and setting pooled contribution rates. We discussed the outcomes at the June 2025 Pensions Committee, where they approved the policies for consultation.
Other employers:
We reviewed the funding strategy for all remaining employers in August 2025.
Small admitted bodies without a guarantor
We looked at whether a low-risk investment strategy could reduce funding risk. We also considered the effect of such a change on the cessation policy.
We discussed the results at the December 2025 Pensions Committee. The Committee approved the updated cessations policy for consultation.
Other funding and risk management policies
During Summer 2025, we also reviewed other areas of the strategy, including:
- exit credits
- bulk transfers
- the approach for setting contribution rates for new employers.
The Pensions Committee reviewed and approved the FSS, for consultation, in October 2025.
Stakeholder engagement
During the valuation, we kept in touch with employers and progress was monitored at each Pensions Committee and Pensions Board. Here’s a summary of how that engagement took place:
Employer forums:
We held an employer forum in March to explain the plan and expectations for the valuation. We held another forum in November 2025 to share more detail on the results and start the FSS consultation.
Focus groups:
We held focus groups with:
- local authority employers
- academy trusts
- and small admitted bodies
to discuss policy changes that affect them. Their feedback helped us finalise the funding strategy and contribution rate proposals.
Employer results:
In November 2025, we sent each employer a report with their funding position and contribution rate to review, alongside the draft FSS.
Funding Strategy Statement consultation:
We shared an updated FSS with employers and guarantors in November 2025 and opened a 30 day consultation.
Extended employer engagement period:
An extended engagement period was held until 31 January 2026. During this time, employers could discuss their results and flag any changes to their employer covenant or data.
