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Large London association becomes latest to leave sector pension scheme
Metropolitan Thames Valley has become the latest major housing association to quit the sector’s Social Housing Pension Scheme (SHPS).
The 57,000-home G15 landlord confirmed to Inside Housing that it transferred out of the SHPS last month.
The London-based group, which was formed from the merger of Metropolitan and Thames Valley Housing a year ago, has moved its pensions assets and liabilities to Entrust Pension Limited, which acts as a trust to occupational pension schemes.
The new arrangements are away from TPT Retirement Solutions, the Leeds-based pension provider which manages the SHPS.
It comes after Inside Housing revealed earlier this month that three other major housing associations had left the SHPS to give them more control over their pension arrangements. It follows a raft of departures two years ago.
SHPS has faced an increasing shortfall in recent years and a year ago it emerged that its deficit had risen to £1.5bn.
The growing deficit meant that housing associations needed to increase their contributions.
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Ian Johnson, chief financial officer at Metropolitan Thames Valley, told Inside Housing: “As part of the work carried out in the merger of our two legacy organisations, we determined that the most effective way of managing our combined pension risk in the long term was to disaggregate from the SHPS multi-employer scheme.”
He added: “Our pension assets and liabilities have been transferred to a third-party master trust – and, crucially, we have worked to ensure that there is no detriment or disadvantage to our employees or pensioners as a result of the move.”
The association had already closed its defined benefit scheme under the SHPS and was only operating a multi-employer defined contribution scheme with TPT Retirement Solutions, according to its latest annual report.
It also runs a funded scheme with the Nottinghamshire Local Government Pension Fund.
Pension experts said they expected more associations to leave the SHPS.
Richard Soldan, partner at actuaries and pensions advisors Lane Clark & Peacock, said: “While it won’t be right for all, I am sure this trend will continue as further associations consider whether they want greater influence over their pension liabilities and risks.”
However, Neal Thompson, partner at pension service provider First Actuarial, said this trend could slow down. He said: “Although bulk transfers are currently hitting the headlines we are expecting fewer transfers in 2020 compared to 2019, with perhaps another spike in 2021.”
Pros and cons of carrying out a bulk transfer
Some advantages
- Greater control over future DB pension financial strategy
- No longer subject to ‘last-man-standing’ risks
- No longer disadvantaged by cross-subsidies
- If you have more than one DB scheme, consolidate them all, reducing costs
- No longer subject to multi-employer cessation debt requirements
Some disadvantages
- One-off costs and management time of agreeing the transfer
- Cost of settling orphan debt
- No longer benefit from cross-subsidies
- Higher ongoing expenses if running a new scheme
- More management time needed on own standalone scheme
