Nearly half (46 per cent) of the UK's Local Government Pension Scheme (LGPS) funds expect to be more than 100 per cent funded at their next triennial actuarial valuation, according to research from Alpha Real Capital.

As reported by our sister title, Pensions Age, amidst improving funding levels, the survey found that three-quarters (75 per cent) of LGPS fund professionals ranked increasing or maintaining returns as amongst their highest priorities post-valuation.

Two-thirds (66 per cent) of respondents cited cashflow management as a high priority, while 60 per cent described their intention to de-risk/diversity away from traditional assets as one of their top priorities.

Meanwhile, around 50 per cent of professionals surveyed intended to focus on environmental, social and governance (ESG) as a priority, with ‘social impact locally and nationally’ and investing with the ‘environmental impact’ in mind scoring similarly.

Alpha noted that the period after the valuation date has seen “significant movement” in interest rates, inflation and equity markets, although it added that it was widely expected that LGPS fund balance sheets have been resilient.

“The ongoing market volatility and high levels of inflation highlights the immediate relevance of the LGPS fund priorities revealed by our survey,” commented Alpha Real Capital CEO, Phillip Rose.

“Focusing on these priorities will require assets that provide inflation protection and improve the resilience of returns, while also targeting ESG benefits.”

Alpha Real Capital client solutions, Stuart Hanson, added: “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.”

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