Social landlords to pay more in pensions
Housing associations will have to pay more into a pension scheme from next year following a worsening of the scheme’s funding position.
A committee of the Social Housing Pension Scheme, which serves more than 62,000 members across 700 housing associations, announced the move on Friday following the publication of results from an actuarial valuation.
The results show the scheme’s funding deficit increased from £663 million in 2008 to more than £1 billion as of 30 September last year. Its funding position, a comparison of the scheme’s worth compared to what it has to pay out, has decreased from 69.7 per cent to 67 per cent over the same period.
A spokesperson for the SHPS said the deficit increase ‘is largely driven by economic factors, in particular the long-term interest rates which form the basis of the discount rates used to value SHPS liabilities.’
The deficit means housing associations will have to contribute an extra £30.6 million per year from next April for 13.5 years.
Colin Small, chair of the SHPS committee, said: ‘Although we advised employers in our autumn forums that we expected the funding position to have worsened, it is still disappointing to have to report cost increases to employers who support the scheme.
‘In the valuation, it was necessary for the committee to give consideration to the changes brought about by the deterioration in markets over the summer of 2011, as well as incorporating additional measures of prudence in the valuation of scheme liabilities, which are reflected in the results.’
The SHPS committee will publish a detailed guidance document providing information on associations’ additional contributions.
Councils, stock transfer housing associations and arm’s length management organisations will be largely unaffected by the changes to the SHPS as their staff are members of the separate Local Government Pension Scheme.