Housing associations had until 31 January to inform the Social Housing Pension Scheme (SHPS) if they wanted to make changes to the benefits they will offer employees from 1 April 2013.
Richard Soldan, partner at LCP, said "We are expecting 2013 to be a year of change for the SHPS. Faced with increased costs from 1 April 2013 many housing associations are taking a fresh look at their benefits strategy and their risk exposure from the SHPS. "
Tim Sharples, also a partner at LCP, continued "Many employers will be moving to a defined contribution or career average salary benefit structure from 1 April 2013. The SHPS has insisted that associations they categorise as "higher risk" only offer defined contribution benefits in the future. Other housing associations will be considering more radical action and we have already seen Radian become the first association to exit SHPS by transferring members into a separate pension scheme. Many other associations are actively considering following their example. We will be interested to see SHPS' response should there be a mass request for exit by its stronger employers, particularly given the recent news that some SHPS employers are in serious financial difficulties.
We also wait the reaction of housing associations in Scotland. They will be looking at the increased costs in the SHPS with concern as they await the results of the next valuation of The Scottish Housing Associations' Pension Scheme, which will be released in Summer 2013.
Add in the new auto-enrolment legislation and changes to the Local Government Pension Scheme - and this means that 2013 will provide a tough challenge for each housing association to set the right pensions strategy for their circumstances."?
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