Housing providers are increasingly reviewing the pension benefits that they provide to staff. Many participate in the Local Government Pension Scheme (LGPS) and/or the Social Housing Pension Scheme, but with reducing income streams they are reviewing whether they can continue to offer defined benefit pensions. This is where you may need strategic pension advice for your business.
With so many providers having to restructure or change terms and conditions, it is vital to minimise the substantial pension strain costs that can arise in the LGPS, both in redundancy and restructuring situations. Often these costs are unavoidable, but we have advised a number of LGPS employers on how best to manage change programmes to minimise the impact on redundancy and business efficiency. We also help employers ensure that decisions on ill-health benefits are appropriately managed, to avoid unnecessary costs.
Our strategic pensions advice service
Some providers have made the decision to close access to defined-benefit pensions, either for all staff or for new joiners. Where the decision is to close them to all staff, consultation is required with a view to reaching agreement with staff about that change. We have helped a number of providers to close access to defined-benefit pensions schemes, working with them to ensure effective consultation and negotiation with a view to reaching agreement, as well as advising on how to go forward if agreement can’t be reached. As part of our service, we help to liaise with pension schemes to agree the terms of exit, including how exit payments will be structured, where relevant.
With the lifetime allowance affecting an increasing number of staff, we advise on putting in place alternative arrangements for those who have reached the lifetime allowance. Additionally, with housing providers looking to merge, form new group structures or re-organise existing ones, we help to ensure that there is no unexpected crystallisation of employer debts, as a result of the arrangements put in place.
Some providers are looking to grow their income by bidding for contracts with local authorities or NHS commissioners. When bidding, the requirement to ensure that transferred staff can still access the LGPS or NHS Pension Schemes (or a broadly comparable scheme) is more relevant than ever. The risks of variable contribution rates, additional contributions, exit payments and the requirement to obtain a bond are significant, and being clear about what risks a contractor is expected to take on is critical. We have considerable experience in advising on, and negotiating, detailed pension arrangements in outsourcing situations and helping providers ensure that they understand the arrangements they are entering into, so that risks can be managed appropriately. Our experience in advising commissioners, as well as providers, means that we are able to provide valuable insight into the approach taken.
If you would like further information about pensions or how our employment team can help you, please get in touch.
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