Posts Tagged ‘Third Sector’

David Davison

The winding up of People Can, which provided homelessness support services on behalf of several English local authorities, has shocked the voluntary sector and led it’s former Chief Executive, Maff Potts, to issue an impassioned plea for change . There is a concern that the People Can scenario could be replicated across the sector with hundreds of organisations being driven in to administration by their pension liabilities.

This is an issue I’ve raised consistently over the last number of years and have made some comments on the potential impact in an article by Patrick Butler in the Guardian.

David Davison

I noticed the announcement last week that the Scottish Federation of Housing Associations Pension Scheme (“SFHAPS”) has been renamed the Scottish Housing Association Pension Scheme (“SHAPS”).

I’m sure the strategic removal of the “F” from the acronym will re-assure members about why their pension scheme unding has allen from just below eighty-ive percent to less than sixty-ive percent in 3 years and less than ifty percent on the PP(F) basis!! Read more »

David Davison

Professional Pensions reported my concerns about the promotion of defined benefit schemes to 3rd sector employers and my view that any such promotion which failed to ensure that the employer fully understood the attendant risks and uncertainties, was irresponsible and totally inappropriate. This elicited some interesting responses and I wanted to thank everyone for their comments on this important issue. There did seem to be a bit of confusion however, which I wanted to clear up.

My comments are clearly focused on DB provision in the third sector. Stephen Nichols, the Chief Executive of the Pensions Trust, was given a 2 page platform and a video to share his views on “Saving DB” and I thought it completely fair and balanced of PP to carry an alternative view and I thank them for that. Other senior staff within TPT have espoused similar views recently around DB so it wasn’t unreasonable to assume it was something of a ‘house view.’ The Trust is a highly regarded and respected organisation marketing primarily defined benefit pension scheme services to third sector employers and I was concerned that some of these employers may accept such a suggestion as being right for them and I wanted to ensure that they were totally aware of the risks involved.

In my experience of advising 3rd sector organisations they are ill-equipped to deal with defined benefit pension arrangements and certainly with ‘multi-employer’ DB arrangements where there is a supplementary risk that the strong will be required to pay for the weak as well as for themselves. The funding position of TPT schemes is not unique, you only have to consider schemes like PNPF and MNOPF to name but two, but their target market is. One respondent accused me of having a binary view and perhaps I do – DB Schemes should be left to organisations who can afford the contributions now and in the future and can deal with the volatility of liabilities and costs. Is anyone seriously contesting that view? Read more »

David Davison

I remember with some fondness Denis Norden and his clipboard each Christmas taking us through another collection of bloopers and mishaps. The strange thing was that the title was a bit misleading as it quite clearly never was alright on the night.

Early in 2010 I made some predictions about the likely outcome of the SFHA pension schemes actuarial valuation and unfortunately when the results were made public these proved to be all too accurate . As I mentioned in the later blog you really didn’t have to be Derren Brown or own a fully functioning crystal ball to arrive at the results. Read more »

David Davison

A wave of optimism broke out as I read a recent interview with Sarah Smart, the Chair of the Pensions Trust (“the Trust”) in which she quite sensibly highlighted the risks faced by charities from their final salary pension schemes.

However the optimism was short lived, as whilst finding it difficult to disagree with the sentiments expressed they struck me as being at odds with another recent article where Mrs Smart appeared to continue to promote the use of Defined Benefit schemes with the statement “Despite numerous and well-publicised assassination attempts on DB Schemes over the past few years, I remain hopeful that they may yet prove to be Rasputin-like in their resilience and stubbornly refuse to lay down and die.” In the same article she had confirmed that she had effectively turned a DC Governance seminar into a sales pitch for DB. Am I the only one who sees some inconsistency here? Read more »

David Davison

 

Recent experience has suggested to me that many third sector bodies are missing out on perfectly viable out-sourced engagements because they are not adopting an effective approach to dealing with the associated pension risks.

 

With considerable pressure on public finances it seems inevitable that there will be a move to out-source increasing amounts of public services to the private sector. This undoubtedly represents a very significant opportunity for the third sector as their skills and specialisms would make them a very attractive home for many of these services.  However, organisations should not be attracted to the bright lights without having a full understanding of the risks and pitfalls which might await them.

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