Court to rule on potential £233m in extra costs for social housing pension scheme members

If the ruling finds that TPT has not been paying the correct amount in benefits, it could mean potential additional liabilities for employers contributing to the fund.

The scheme currently has around 65,000 employees from the social housing sector enrolled.

A spokesperson for TPT said: “The trustee has undertaken a review of historic scheme benefit changes in order to confirm whether certain amendments were made in accordance with the scheme’s governing documentation. 

“As a result, and as is common in these situations, we will be seeking clarification from the court. Until we receive clear guidance from the court, which we do not expect before late 2024, we will not know whether any increases to member benefits will be needed, or to what extent. However, we are discussing the potential implications with scheme employers now.”

Mike Richardson, a partner at LCP, warned that the review could prompt some housing associations into considering whether they want to remain in the scheme.

He said: “I have spoken to some associations who are concerned about the possible future impact on their lending covenants and are considering their options.

“The big increase in the possible additional liabilities within SHPS is unwelcome news and a backward step at a time when the funding position of SHPS was actually showing real improvement.”

In February, Inside Housing reported how the deficit had dropped below £1bn for the first time in over a decade.

Sam Mullock, a partner at First Actuarial, said the employers he advises are concerned and disappointed by the potential £233m increase in liabilities.

He added: “It should be noted at this stage that there is uncertainty about how the court will rule and how any additional costs would be met by employers.

“As a first step we are helping boards and executive teams understand this issue. Any increase in liabilities will most likely be charged ‘above the line’ and, in due course, this will need to be considered in business plan scenarios.”

Kirsty Thompson, employment partner at Devonshires, who act for registered providers transferring out of SHPS, said: “In our view there is scope for collective action, and speaking with a single stronger voice to TPT and other stakeholders could deliver real benefits. We already have a significant number of RPs in SHPS and who have transferred out of SHPS on board to commission joint advice and explore options and solutions."

Thompson highlighted how employers may want to take their own legal advice on various related matters including reviewing the court papers which SHPS have told employers they will share in draft before filing with the court, and possible recourse if the ruling goes against TPT and results in additional liabilities for employers.