Housing staff face massive pension hikes
Thousands of housing employees face a contributions hike as fund deficit grows by £370 million
Thousands of front line housing professionals face massive hikes in their pension contributions after the main housing association pension scheme saw its funding position worsen dramatically.
The Social Housing Pension Scheme this week revealed that its deficit - the gap between its assets and liabilities - had ballooned to more than £1 billion due to poor returns on government bonds in which the scheme had invested heavily. This is a leap of nearly £372 million in just three years.
Landlords now fear an exodus of the scheme’s 64,000 members likely to baulk at increased annual contributions equating to as much £1,000 a year.
As a result, Inside Housing has also learned that at least one member of the G15 group of leading London housing associations is consulting staff and trade unions over leaving the scheme.
The 700 housing associations that contribute to SHPS will have to pay an additional £30.6 million per year over the next 13.5 years if they continue as members.
Landlords expect that at least some of the burden will be passed on to staff. ‘I cannot see us swallowing the whole thing,’ said a finance director at one housing association with around 300 staff in the scheme.
‘We have so many other stresses and strains that I can’t see us not [passing the extra costs on to members].’
Some organisations, including Genesis Housing Association, have closed the books on new entrants to the scheme, with one finance director at a G15 landlord describing the situation as ‘a ticking time bomb’.
Orbit Group, which also has around 300 staff contributing to SHPS, estimated that its annual contribution could rise by £500,000 to £1.7 million.
‘We expected a substantial change [in deficit] but this was more than we had anticipated,’ said Anne Turner, finance director at the 36,000-home landlord.
If Orbit passed its predicted increase on to staff it would equate to an average of £1,666 per person per year.
Trade union leaders urged housing associations not to pass on the costs.
‘People simply cannot afford massive hikes,’ said John Gray, housing association branch secretary at public sector union Unison.
‘They will walk away from it and that will damage the scheme.’
In numbers: SHPS
number of individual Social Housing Pension Scheme members
total deficit for SHPS, based on September 2011 valuation
number of housing associations currently contributing to the scheme
value of assets in the scheme