Monday, August 16, 2010

Council loses Court fight to duck Housing Association Pension obligations

This is an extremely odd story (to me anyway) and probably completely obscure to most folk. (Inside Housing 12 August). Daventry Council transferred its 3100 homes and housing staff to Daventry & District Housing Association. Despite there being an explicit clause in the transfer agreement that the Council will be responsible for making up the deficit in the (LGPS) pension schemes up to the point of transfer, the Council later went to the high court and claimed solicitors made a "mistake" and both parties were liable.

The High court kicked out the case on the seemingly very logical grounds that D&D HA had never made any plans to pay the deficit or put it in their business plan.

Apart from the legal arguments about who did and said what – there is a basic pension governance issue at stake. Why should a new organisation be responsible for a pension deficit run up before it even existed? Daventry Council before transfer would have had the legal responsibility for trying to make sure that the pension scheme (part of Northamptonshire LGPS) was properly funded and investments handled properly before transfer.

After transfer the housing association as an “admitted body” would then be “responsible” and it would be up to them to play its part in making sure that the scheme was run properly and they would liable for any funding shortage.

The impact on residents (and staff) in a small housing organisation of dealing with an unplanned £2.4 million shortfall could have been disastrous.

Yet another reason why staff members of pensions schemes (who are the real beneficial owners) should be fully engaged in all aspects of their governance.


Anonymous said...

Whats this scandal re Eric Pickles new £70,000 car paid for by tax payers
maybe the audit commission should investigate

What a disgrace

cuts for the poor new big cars for the millionaire cabinet ministers

Anonymous said...

disgusting tories