The Social Housing Pension Scheme, which has 25,000 working members, will raise contributions 2.2% from next April.
Staff and their employers will each pay an extra 1.1% into the fund.
Raglan Housing Association in Dorset, for example, will pay an extra £40,000 a year and its staff will together pay the same amount. Finance director John Bruton said: "We did our own mini-consultation and are happy to go along with it."
The rise is designed to pay off the deficit over 16 years – the average working lifetime of members. However, contributions will be reviewed again in three years' time, and could change further if the value of the trust's investments or the estimated longevity of members continues to rise.
The fund's latest valuation, published in April, showed its deficit had risen £19m in the three years since the last reckoning (HT 25 April, page 14).
It is far from the only fund to suffer in this period: plunging stock market values and longer lifespans have pushed hundreds of pension funds into deficit this year and housing associations including Home, London & Quadrant and Places for People have developed multimillion-pound shortfalls.
Trevor Smith, consultant to the chief executive at the Pensions Trust, which runs the Social Housing Pension Scheme, said it had consulted members and employers on the change. They had come out in favour of the 2.2% rise as opposed to a 1.9% rise with changes to payments for people who retire early because of ill health.
However, there was continuing uncertainty about changes to benefits for people retiring early. "The committee will look at this issue during the next 12 to 18 months," Smith said.
In a discussion paper to be published later this month, it will also ask whether the age at which pensions can be paid should be raised from 50 to 55.
Source
Housing Today
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