Challenge being mounted to resist switch by Pensions Trust to help cut deficit
Housing bodies fight to protect staff pension pots
Dozens of housing organisations are set to challenge a decision that could threaten the pension pots of their workers.
The Pensions Trust, which administers the Social Housing Pension Scheme, has been assessing the 700 employer organisations that contribute to it. Several employers have been told they will have to switch their staff members from the defined benefit scheme to the less secure defined contribution scheme to counter the risk of ratcheting liabilities.
The news follows an announcement in May that there is now a £1 billion deficit in SHPS owing to low yields on government bonds.
The NHF, which helped establish SHPS and has around 60 per cent of its 140 staff on the scheme, is in negotiation with the Pensions Trust over the nature of its ongoing involvement in the scheme.
Benchmarking group Housemark has been told to move employees off the scheme or put £3 million of security aside over five years. After corporation tax this would cost the company £750,000 a year - equivalent to three quarters of its gross profit for 2011.
Ross Fraser, chief executive of Housemark, which would have around 30 staff members affected, said: ‘Removing Housemark’s employees’ future eligibility for the defined benefit scheme is hardly going to make the overall position of SHPS more secure.’
Nick Atkin, chief executive of the Halton Trust, said he intended to challenge ‘robustly’ any attempt to force the employer off the scheme.
From April 2013, employers will have to increase their contributions by a total of £30.6 million over 13.5 years to offset the £1 billion deficit.
Contributions will be assigned on a ‘share of liability’ basis, according to a letter sent by SHPS chair Colin Small to employers earlier this year.
Those deemed to be at a greater risk of not meeting liabilities have been asked to provide security or show evidence of financial stability. Otherwise, they may be asked to stop the defined benefit scheme.
Logan Anderson, head of customer relations at the Pensions Trust, said he expected all appeals to have been reviewed by September.
- £1 billion deficit in SHPS
- £372 million increase in deficit in three years
- 700 organisations contribute to SHPS
- £30.6 million contribution increase required