LCP Advises Southern Housing Group

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Southern Housing Group exited the Social Housing Pension Scheme (SHPS) on 30 September 2017 and transferred its DB members into a new section of its existing Southern Housing Group Pension Plan.

The transfer means the vast majority of Southern Housing Group’s defined benefit pension obligations are consolidated into a single scheme, and is the first bulk transfer from SHPS to a scheme outside of TPT Retirement Solutions.

The transfer was taken to allow Southern Housing Group to develop a pension funding strategy that better suits its aims and to allow it to manage its pension risk, including the scheme’s investment strategy, in a way that better suits its long-term plans.

As part of the transfer, Southern Housing Group took actuarial advice from LCP and legal advice from Devonshires, and worked closely together with the SHPS Pensions Committee to ensure that both sets of Trustees’ regulatory duties were satisfied, and that all members’ interests were protected (both those with benefits earned whilst employed by Southern Housing Group who are transferring and those whose benefits were with other SHPS employers and therefore remain in SHPS).

Mike Richardson, a partner in the housing team at actuarial consultants LCP who advised Southern Housing Group on the transfer said: “We are pleased to have helped Southern transfer their liabilities out of SHPS as part of their broader pension’s strategy. There are now six confirmed bulk transfers out of SHPS and we are aware of a number of other associations that are considering this option.

“This is the first time a provider has taken a bulk transfer outside of the umbrella of TPT. Southern Housing Group already sponsors their own defined benefit pension scheme so the decision to combine the two schemes was made to better align the funding strategies and reduce the pension’s risk.”

“As we mentioned in our recent webinar, we expect the deficit to have increased significantly when the results of the 2017 valuation are announced and this is likely to lead to a large increase to contributions.

“In light of this associations are considering how to manage their defined benefit pension’s risks, and a transfer out of SHPS could give them greater control in the future. However, there are a lot of complex issues to consider around the pros and cons of a transfer and it won’t be the right option for everyone.”