The Local Government Pension Scheme (LGPS) deficit has fallen to half the level previously expected - going down to around £35bn - new figures have revealed.

KPMG had anticipated a deficit of around £70bn based on a like-for-like basis with the 2013 valuation, but a higher discount rate used by actuaries meant the deficit had reduced ‘significantly’.

However, the firm warned this does increase the risk being taken by LGPS employers.

Steve Simkins, pensions Partner at KPMG, said: ‘The actuarial valuation indicates that employers in the LGPS collectively need to find around £35bn to plug the funding gap. The fact that the deficit fell in such difficult market conditions highlights the increasing reliance of the LGPS on the future performance of its assets and this puts employers in a higher risk position.

‘Despite very different assumptions and approaches, outcomes for local authorities are largely consistent but our analysis suggests that other employers are increasingly exposed to a postcode lottery according to the fund they are in and the scheme actuary involved.’