The Barking and Dagenham Council pension fund has achieved a significant milestone, reaching a funding level of 108% as of March 31, 2025. This improvement, up from 101% in 2022, means the fund now holds assets exceeding its liabilities by £0.11bn, a positive development for both the council and its pension scheme members.
The improved financial health of the pension fund is attributed to higher than expected investment returns, which contributed a gain of £23m since 2022. A review of financial assumptions, combined with favourable market conditions, further boosted the fund by £204m. These strong investment returns have reduced the overall cost of the Local Government Pension Scheme (LGPS).
As a result of this enhanced financial position, the employer contribution primary rate has been reduced from 21.5% to 18.1% of payroll, effective from April 1, 2026. This adjustment, confirmed in the actuary's final report on the 2025 actuarial valuation, aims to maintain stable employer contribution rates for the long term. Individual employer contribution rates have now been notified to fund employers.
The projected funding position is based on current assumptions and agreed contributions. Any actual experience or unforeseen risks since March 31, 2025, will be fully considered during the 2028 valuation, at which point employer contributions will be revisited. The proposed strategic asset allocation includes a reduction in listed equities and an increase in UK Government Bonds to lower overall risk while maintaining forecast returns.
During a Pensions Committee meeting on March 26, 2026, members reviewed the actuarial valuation report and approved the revised Funding Strategy Statement (FSS). The FSS outlines the approach to meeting the fund's liabilities and managing risks, emphasizing long-term solvency and cost-efficiency. The statement identifies several key risks, including employer covenant, investment, inflation, mortality, member options, regulatory, and climate risk. Mitigation strategies are in place for each, such as a diversified investment strategy, regular monitoring of returns, bespoke longevity analysis, requiring security from employers, scenario analysis for climate risk, and participation in government consultations. The Fund Actuary provides cashflow projections at each triennial valuation to inform investment strategy and understand the fund's cashflow position. For employer covenant risk, the fund monitors employers' financial strength and may require security like guarantees or bonds.
The Pensions Committee meeting agenda and public reports pack can be found at Agenda frontsheet Thursday 26-Mar-2026 19.00 Pensions Committee and Public reports pack Thursday 26-Mar-2026 19.00 Pensions Committee respectively.
