Housing Corporation pension deficit now more than £38m

The deficit in the Housing Corporation’s pension scheme grew to more than £38m last year despite an increase in the estimated value of the fund.

The value of the fund increased by £2.5m in 2003/4, mainly because of the improved performance of the stock market. But that gain was wiped out by an increase in pension scheme liabilities, including payments.

Overall the deficit rose £500,000 in 2003/4.

The figures emerged in the corporation’s annual report, published on 16 August.

Three years ago the corporation’s pension fund, which is part of the local government pension scheme, had a deficit of less than £4m.

Fellow members of the scheme have seen their deficits shrink. The Peabody Trust’s pension deficit decreased from more than £11m to less than £9m during 2003/4.

Peabody had also seen its deficit rocket in 2002/3, from £2.5m to top £11m.

Ronnie Clawson, Peabody’s corporate service director, attributed the fall in its deficit to the improved market climate.

However, he was unable to rule out the possibility that employer contributions would have to rise in order to close the gap further.

“A triennial review of the LGPS by the group that administers the fund is to be completed in October and an increase in contribution may be recommended,” Clawson said.

Any increase in contributions would not be applied until April 2005 and would affect employers rather than employees.The corporation’s annual report also said 97% of regulated housing associations are properly managed.

This means the corporation met its own target for 2003/4 of ensuring that at least 95% of associations meet the regulatory code.