SHPS 2026 valuation: LCP urge housing associations to review their long-term strategy as stable funding position predicted

With the next valuation of the Social Housing Pension Scheme (SHPS) due on 30 September 2026, LCP expect there to be limited changes to the deficit contributions housing associations are required to pay, although there is some uncertainty. Ultimately the valuation should bring much-needed clarity to the finances of SHPS, and LCP are urging housing associations to take this opportunity to review their long-term strategy in SHPS.

Current market conditions and regulatory developments could present opportunities for housing associations to manage or settle their liabilities at historically low costs, or benefit from improved funding positions in the longer term.  LCP have been helping a range of associations take steps like this in recent years.

On the face of it, the SHPS funding position is likely to be relatively good news for associations who have seen increased pressure on budgets.  However, there are several key areas which may have an impact on what associations are expected to pay.

The most significant issue is likely to be the ongoing court case. This will establish how SHPS and other Verity (the Trustee of SHPS) schemes should be administered. If the court were to find against Verity, this could lead to an increase to members’ benefits and therefore worsen the funding position, potentially significantly.

The industry is still awaiting the judgment. The hearing itself took place in February and March 2025 and, although there is no formal timetable for when a judgment will be published, LCP hope the Court will publish something by the end of 2026. If the judgment led to additional liabilities that needed to be met by contributions this could mean extra deficit payments for associations.

In addition to the above, Verity could change the methodology used for the valuation. LCP believes that under the new pensions funding regime there would be scope to move to less prudent assumptions which could reduce any need for additional contributions coming out of this valuation, even if the court case results in extra liabilities.

LCP expects the cost of new defined benefit pensions being built up for current employees to reduce following the valuation. This could offer some savings for those associations that continue to offer that type of pension.

Mike Richardson, LCP Partner and LCP’s Head of Social Housing, said: “The SHPS valuation is always an important time for associations, given the potential for a significant impact on their pension costs. All else equal we would expect SHPS to be on track with limited changes to deficit contributions.  There are however some uncertainties which could go either way. Particularly if the position remains strong, this could present opportunities for housing associations to better manage risks and volatility at historically low costs, which would be great news.”

Tim Gilbert, LCP Partner, added: “The real unknown is the Verity court case, and we continue to wait for the judgment to be published. That will have an impact not just on contributions required for the valuation, but also on exit calculations, accounting, and other issues.

"It is important associations take the time now to consider their long-term strategy so they are able to react when the judgment is known, particularly as we expect first-movers to have an advantage.”