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Case study

Simplifying an Association’s pensions

Pensions & benefits Housing Associations


This Housing Association had carried out multiple mergers in the past and had recently undergone a commercial restructuring to simplify its corporate structure.

It was left with a wide variety of pension arrangements across the Group including both defined benefit schemes (Social Housing Pension Scheme, two single employer defined benefit schemes, four separate LGPSs, all with different contribution requirements) and defined contribution schemes (two separate ongoing arrangements).

The Board wanted to simplify its pensions and benefit structure to improve governance, reduce risks and improve employee engagement. To achieve this and take the project forward, the Board appointed a dedicated Task and Finish Group which comprised a diverse group of senior decision makers from Finance, HR and payroll with oversight from two non-executive directors.

Our approach

As the initial stage, we asked senior decision makers to complete an objectives survey to identify and understand their priorities for this project. This survey then informed our review of the existing arrangements, including the associated costs and risks.

As part of our review, we provided up-to-date estimates of exit debts in each DB pension scheme and benchmarked the Association’s Defined Contribution offerings against their peers. This involved considering contribution structures, charges, member choice, member experience and options at retirement.

We provided recommendations to best meet their objectives and discussed our findings with senior decision makers before presenting agreed recommendations to Board. Our recommendations included that a member survey be carried out to understand which benefits members valued, and which benefits members did not appreciate so much. This covered a wide range of benefits including pensions, cars, healthcare and salary sacrifice benefits.

The outcome

The Task and Finish Group reported back to Board with a recommendation to gradually reduce the Association’s exposure to defined benefit risks. The Board agreed to a stepped approach to risk reduction:

  • Over early 2022 it consulted with SHPS DB members to close to future accrual and move members to its existing defined contribution scheme from April 2022
  • During 2023 it carried out a member consultation with over 100 LGPS members to cease future accrual and move to defined contribution
  • The Board also decided to improve its defined contribution scheme for all employees during 2023.

Both member consultations were supported by group presentations and one-to-ones from LCP’s pension specialists. The defined benefit members were also supported by paid-for independent financial advice.

The organisation is also in process of insuring some of the benefits for its two legacy defined benefit schemes – a further step to reduce the Association’s overall risks.

The LCP Social Housing team know the sector well. They are also extremely good at helping complex pensions issues to be understood by our staff members.

Chief Finance Officer Housing Association client

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