When was the last time you reviewed your DC pension arrangements?

For many housing associations it is easy to focus on Defined Benefit (DB) deficits and, more recently, surpluses, and the challenges and opportunities they present. But how can you be sure your DC pension arrangement is delivering good value for you and your employees?

After all, in most cases, your DC scheme is where the majority of your current employees are saving for retirement. Pension benefits are often a significant part of any remuneration package and could impact on staff retention and recruiting new talent.

Consequently, it is important that your scheme design is fit for purpose and future proof, and that the pension provider you use helps your employees to understand their pension and offers great value for money.

Key take away actions.

• Look at benchmarking your scheme design against other housing associations, more widely against other employers in similar sectors and external standards. Consider introducing salary sacrifice and additional communications to increase your employees’ engagement with their pensions and help them understand the value of the benefit you are providing.
• Consider reviewing your scheme to ensure it is delivering value for your members, and make improvements if necessary.

Further considerations.

There are two aspects to your DC arrangement that we recommend all employers consider.

How much do you and your employees contribute?

Employers were required to consider contribution rates in April 2018 and April 2019 when the Auto-Enrolment minimum rates increased, but in many cases this review focused on the legislation rather than improving outcomes.

If you haven’t looked at your structure since then, it is time to review your scheme design. For example, how much are you paying in contributions?What about other similar organisations?

Benchmarking can help you check for any disparities, whether that be against other organisations or external standards such as Living Pensions or the PLSA’s Retirement Living Standards.

Also, how are you targeting your pensions spend across staff? How much flexibility do you offer, and do your employees recognise and make use of the flexibilities? Do you offer salary sacrifice, which can be a highly efficient way of making contributions.

Communications can help ensure members understand their options.

Are you sure that the type of scheme you use is right for you, and is your provider offering best value?

We have seen significant changes in the UK pensions market over the past five years with a big trend towards the use of master trusts (large arrangements, each used by lots of employers), improvements in member engagement tools, guidance and advice options.

Many providers have reduced their charges and offer more flexibility on terms. We have recently had plenty of success in helping employers to reduce the charges their employees pay to their pension provider.

Most housing associations have employees with DC benefits in the Social Housing Pension Scheme (SHPS) DC, The Growth Plan or another arrangement with TPT. You may have heard that TPT are taking significant steps to improve their offering and bring them more in line with other DC master trusts.

From Spring 2025, TPT is looking to implement improvements including:

• a new “in-scheme” retirement product which will streamline the retirement process.
• a new member online portal which they have suggested will be more user friendly, improve employee education and aid decision making, as well as help members consolidate other pension pots into their TPT policy.
• a new mobile app.

These are all positive steps from TPT, but it’s worth bearing in mind that the rest of the market is not standing still either.
Many of our housing association clients have already made improvements to their DC pension arrangements to the benefit of their employees and former employees. Why don’t you consider the same?

Please speak to us if you would like to find out more about our benchmarking services or to discuss your scheme.