Many housing associations understandably feel trapped in their existing pension schemes. Withdrawing from a multi-employer pension scheme such as the Social Housing Pension Scheme (SHPS), for example, can involve making a large payment into the scheme to secure benefits for all members.
Under SHPS, the trigger for such a termination debt tends to be the date when the last active member leaves the scheme. This debt is not payable incrementally over time; instead it must be paid as a one-off sum based on the ‘insurance cost’ of those benefits. This will be an expensive and significant debt for most housing associations.
For the Local Government Pension Scheme (LGPS), a termination valuation is required if an employer is about to leave the scheme. Many LGPS funds also have a policy of requiring a debt payment when the last active member leaves, and will set this figure close to the insurance cost of securing benefits.
Different LGPS funds have different policies governing when they trigger the debt and how it is calculated. It’s important to plan ahead and set an appropriate mitigation strategy.
Our housing sector pension specialists can help you by:
We are the largest provider of pension services to UK housing associations. We have achieved this by focusing on delivering good value for money for every client.
We have built up good relations with SHPS and with the various LGPS funds, and we use these relationships to get the best possible terms for our clients.
Our vast experience of managing termination debts means that we understand the policies of SHPS and the different LGPS funds, and you get the benefit of our experience of mitigating debt successfully.
First Actuarial are very approachable. They’re good at helping managers and Board members digest a very difficult area, and they’ve also been proactive in helping us shape an innovative solution.
– Paul Richmond, Group Director of Finance and Resources, Watford Community Housing
Make sure you’ve got the information you need to monitor your pension arrangements. First Actuarial’s firstwatch service provides an affordable package of essential pension resources for housing associations.
