Pension news for Trusts: What to prepare for LGPS surplus

Authored by Iain Maris

SRMA Quality Assurance and Mentoring Lead for School Business Services

Iain is a dedicated education sector professional with over 20 years of experience in school finance and leadership. He joined a multi-academy trust in 2015 as Business Director and later became Accounting Officer, before founding his own education consultancy in 2023. Iain is an Accredited SRMA and CFO Mentor and joined SBS as SRMA QA and Mentoring Lead in 2025.

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When you think of public sector pension schemes the phrase “success story” isn’t one that would immediately spring to mind.

But the fact is that the Local Government Pension Scheme (LGPS), which many trust support staff will be members of, has soared into surplus in recent years.

Of the 86 different LGPS funds in the UK, a staggering 85 are now in surplus. It’s a transformation in fortunes which is largely down to higher investment returns.

That is potentially very good news for some trusts, which may see their employer contribution rates fall from over 30% to closer to 20% from April 2026 because the surplus means there is enough money to cover current and future benefits. 

This extra funding – and I must stress this will vary because not all funds will pass on the same level of reductions – could release tens of thousands of pounds in some large MATs over the next couple of years, potentially offsetting some support staff job cuts. 


We’ll have to wait for the April 2026 implementation for all this to be confirmed but it’s important to think about it now rather than later. Clean data, proactive governance and engaging early with your LGPS fund managers to get a detailed update are good first steps.

What this Means for Trusts

Poor data quality can inflate liabilities and lead to higher contributions, undermining the valuation’s positive impact.

Strategically, trusts should prepare for multi-fund complexity, especially where staff are enrolled in different LGPS schemes. Exit credit policies also vary, so any outsourcing or fund exits must be carefully reviewed to avoid unintended financial consequences.

Trustees are advised to model pension costs under multiple scenarios, embed valuation commentary into budget planning, and seek actuarial clarification where needed.

How to Prepare 

Here’s the advice my SRMA colleagues are sharing with the school business leaders we are supporting around the country:

• Make sure your data is accurate. Submit LGPS returns promptly on a monthly basis and resolve any issues with missing joiners, leavers, or duplicate records. Audit casual staff.
  
  
• Review contribution rates. Monitor your fund’s valuation outcome and prepare for potential reductions in employer contributions from April 2026. Model multiple scenarios to support budget planning.
  
  
• Prepare trustee commentary. Draft clear, strategic summaries for governance packs, highlighting funding levels, trends in surplus or deficit, and implications for financial planning.
  
  
• Coordinate across multiple funds. MATs with staff in different LGPS schemes should track each fund’s valuation separately and consolidate implications for trust-wide planning.
  
  
• Embed pension strategy in risk planning. Include LGPS valuation outcomes in your financial risk register and ensure that trustees understand the long-term pension cost trajectories.
  
  

A Piece of Welcome Good News

The LGPS success story is a piece of welcome good news for trusts which should have a significant impact on stretched finances in the new financial year. Planning and preparation – and a healthy dose of cautious optimism – will help your trust to be in the best position to take advantage of the benefits come the spring.

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