Managing termination debts

Housing associations need to plan ahead when managing termination debts

Many housing associations understandably feel trapped in their existing pension schemes. Withdrawing from a multi-employer pension scheme such as the Social Housing Pension Scheme (SHPS), for example, can involve making a large payment into the scheme to secure benefits for all members.

Under SHPS, the trigger for such a termination debt tends to be the date when the last active member leaves the scheme. This debt is not payable incrementally over time; instead it must be paid as a one-off sum based on the ‘insurance cost’ of those benefits. This will be an expensive and significant debt for most housing associations.

For the Local Government Pension Scheme (LGPS), a termination valuation is required if an employer is about to leave the scheme. Many LGPS funds also have a policy of requiring a debt payment when the last active member leaves, and will set this figure close to the insurance cost of securing benefits.

Different LGPS funds have different policies governing when they trigger the debt and how it is calculated. It’s important to plan ahead and set an appropriate mitigation strategy.

How can First Actuarial help?

Our housing sector pension specialists can help you by:

  • Advising you when a termination debt will be triggered
  • Estimating the level of debt that the scheme will set, and projecting that into the future
  • Analysing your employee profiles to help you understand future trigger points for any debt payable
  • Helping you plan for the day when that debt becomes payable
  • Setting strategies to mitigate against or even avoid termination debt altogether.

Why choose First Actuarial?

We are the largest provider of pension services to UK housing associations. We have achieved this by focusing on delivering good value for money for every client.

We have built up good relations with SHPS and with the various LGPS funds, and we use these relationships to get the best possible terms for our clients.

Our vast experience of managing termination debts means that we understand the policies of SHPS and the different LGPS funds, and you get the benefit of our experience of mitigating debt successfully.

Get in touch

Get in touch with one of our housing experts to discuss how we can help you.

First Actuarial are very approachable. They’re good at helping managers and Board members digest a very difficult area, and they’ve also been proactive in helping us shape an innovative solution.

- Paul Richmond, Group Director of Finance and Resources, Watford Community Housing

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Housing association Aster Group extended its financial wellbeing programme and brought in First Actuarial to deliver a bespoke Retirement Planner, with supporting webinars and one-to-one sessions.

"People love the one-to-ones and are grateful for them. It’s a valuable offering that would otherwise cost them hundreds of pounds. People recognise it as a real benefit."


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“We had a very good experience working with First Actuarial. I felt that they were always on the end of the phone, available to help and respond to issues as they arose."

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