Issued on: 22 April 2009
The Social Housing Pension Scheme (SHPS) has today published the preliminary results of its triennial actuarial valuation (with an effective date of 30 September 2008).
The Scheme deficit has increased from £283 million at the last valuation (effective 30 September 2005) to £663 million, as at 30 September 2008. As a result, deficit recovery contributions will increase from their current level of 4.4% to 7.5% per annum. The Scheme deficit is expected to be cleared in 13.5 years.
SHPS has been consulting with employers over the future of the Scheme and, in particular, the benefit options employers are able to offer to their staff. In consideration of feedback received, the SHPS Committee also announces an extension to the range of benefit structures available to employers and their staff. From April 2010, employers will be able to offer their staff two further defined benefit options (CARE 80ths and final salary 80ths) and, from October 2010, defined contribution options. The new defined benefit options will operate on a contracted-out basis and the defined contribution options will operate on a contracted-in basis.
Colin Small the Chair of SHPS commented: “Like most schemes undergoing an actuarial valuation at the current time, SHPS is not immune to the effects of the poor performance of world stock markets, nor to the increasing life expectancy of its members, both of which factors have impacted upon the results of the valuation. In determining the valuation basis, SHPS has taken actuarial advice and has also taken the opportunity to consult The Pensions Regulator over the valuation process, as it did in 2005.
“In providing a wider range of lower cost, lower risk options for our employers and their staff, we are enabling employers to offer a benefit structure which allows them to focus on their core business, while maintaining excellent pension provision. In offering defined contribution options for the first time, SHPS has demonstrated that it is able to respond to the changing needs of its employer members.”
SHPS has written to all employers in the Scheme, setting out the results and impact of the valuation, together with the range of benefit options available from 2010. A consultation process now begins between employers wishing to review their arrangements and their staff. Commenting on this, Logan Anderson, Head of Customer Relations at The Pensions Trust, added: “SHPS will be supporting employers in this process in several ways - by providing a detailed guidance note, to be issued in May 2009, by running a series of employer forums in June and in July 2009, and by offering a number of open days at The Pensions Trust’s office in Leeds.”
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