Councils including Glasgow’s are set to receive a multi-million-pound boost after it was agreed pension contributions can be cut.

Scotland’s biggest local government pension fund has revealed an “exceptionally strong” set of results, with a surplus of almost £9billion.

Managers said Strathclyde Pension Fund’s huge surplus would allow a reduction in employer contributions, a move which was backed by the committee that governs the fund today.

Cllr Ricky Bell, who chairs the committee, said its highest-ever funding level is good news for pensioners, members saving for retirement and employers.

The largest employers, which includes the 12 councils in the former Strathclyde region, have been contributing 19.3% of the value of their payroll but that will drop to 6.5% over the next two years — freeing up millions of pounds.

Cllr Bell said: “The fund exists to benefit its members — and this exceptionally strong set of results is very welcome for tens of thousands of people already receiving their pensions and many more saving for a secure retirement.

“However, we also have hundreds of employer members, who typically make very substantial contributions on behalf of their workers.

“The flexibility to reduce those contributions while maintaining a prudent, low-risk approach to paying pensions could support them, their workforce and those that rely on their services.”

Actuarial valuation, a process which occurs every three years, determines the value of the fund’s current and future liabilities and compares that to the current value of its assets.

It found the fund’s assets have grown from £21bn in 2020 to just under £27.9bn, while liabilities have fallen from around £19.7bn to under £19bn.

Experts then calculated a ratio to express the level to which current and future pensions are funded. It is now at 147%, up from 106% in 2020.

The information has been used to set a future funding strategy, with managers recommending maintaining a surplus, a ratio higher than the usual 100% target and continuing to de-risk investments.

Committee members agreed to lower employer contributions. Around 70 of the largest employers, including councils, have been contributing 19.3% of the value of their payroll for over 10 years.

That will be lowered to 6.5% for the next two financial years, before rising to 17.5% in the third year.

A fund spokesman said the £9bn surplus was almost 50% more than would be required to pay pensions for all current members, now and in the future.

In a report to the committee, managers stated preliminary analysis confirmed that the “very strong funding position allows some flexibility to reduce contribution rates” as part of the funding strategy.

It proposed reverting to “a sustainable long-term rate in the final year (2026/27)”. “This should ensure that employers factor a realistic long-term cost into future budgets.”

The report added: “In any year, the employer contribution rate will not be lower than the average member contribution rate.”

Cllr Jill Brown, Glasgow Labour’s finance spokeswoman, urged the city administration committee and the Scottish Government to “provide assurance that the proposed changes will not be used as an excuse to reduce funding” to the council.

“Our services are already at an all-time low, and we must use this opportunity to invest in technology and secure a sustainable step change in service delivery that will last even after employer contributions increase to 17.5%.

“A land grab by the Scottish Government in such a fragile state would be deeply damaging and we would hope that it would not be considered.”

Strathclyde Pension Fund is managed by Glasgow City Council.