Social Housing Pension Scheme (SHPS) 2026 valuation: Time to look beyond the next contribution bill?

For housing associations participating in the SHPS, a valuation usually brings one question to the fore: what will this mean for our pension contributions?

With budgets under pressure, that is understandably a priority. But the valuation as at 30 September 2026 could also provide an opportunity to step back and consider a broader question: does your organisation’s long-term approach to SHPS still fit its objectives?

Our expectation is that, all else being equal, the valuation could lead to limited changes in deficit contributions. However, there are significant uncertainties that could move the position, not least the Verity court case. Preparing now could help housing associations respond once the picture becomes clearer.

What might happen to contributions?

It is important to distinguish between contributions towards benefits already earned (deficit contributions) and contributions towards pensions employees are building up now, for organisations that still offer defined benefit (DB) pensions through SHPS (future service contributions). The valuation could affect them differently.

Deficit contributions: our expectation is that the SHPS funding position has remained broadly on track. This could lead to limited changes to the deficit contributions housing associations are required to pay, with the current Recovery Plan due to cease in March 2028.

Future service contributions: we expect these contributions to reduce following the valuation. This could provide some savings, although the outcome will depend on the valuation assumptions and resulting contribution rates.

This could offer some welcome stability for housing associations’ financial planning. However, there remain considerable uncertainties which may have an impact on what organisations are expected to pay.

The court case remains a major uncertainty

The ongoing court case concerning SHPS and other schemes overseen by Verity, the trustee, is potentially the most significant variable. Depending on the judgment, some members’ benefits could increase, adding to the scheme’s liabilities and potentially leading to additional deficit contributions being required.

The implications extend beyond the valuation itself. The outcome could also affect exit calculations, accounting and the options available to housing associations considering a change in their pension strategy.

There is no formal timetable for the judgment. We hope it will be available by the end of 2026, providing a firmer basis for decisions during the valuation process.

Could the funding approach make a difference?

The court case is not the only factor to watch. The assumptions and methodology used to value SHPS liabilities will also matter.

The new pensions funding regime could give Verity scope to adopt less prudent assumptions. If it does so, this could reduce the need for additional contributions at this valuation, potentially offsetting some of the impact of any extra liabilities arising from the court case.

Why think about strategy now?

A relatively stable contribution bill would be welcome, but it should not mean overlooking pensions in your financial planning.

Market conditions and regulatory developments could present opportunities to manage or settle pension liabilities at historically low costs. For some organisations, that may mean exploring an exit from SHPS. For others, continued participation may remain the right approach.

Finance teams can use this period to:

• Revisit their objectives: is the priority contribution stability, reducing risk or settling liabilities?
• Understand their options: what could each approach mean for affordability and longer-term financial planning?
• Prepare for different outcomes: how would the court judgment or a change in valuation assumptions affect the preferred strategy
• Consider future pension offering: what you want to offer staff should be considered alongside how you manage legacy SHPS DB liabilities - the two decisions are closely linked.

The right answer will differ between organisations. The important point is to be better placed to act when the uncertainties are resolved.

The 2026 valuation is not just about the next contribution bill. It is an opportunity to make sure your pension strategy supports your organisation’s longer-term plans.

Want to find out more?

LCP’s specialist housing team can help with all aspects of your pension strategy. If you’d like to discuss how we can help, please do get in touch.

Once the Verity court case judgment is published, we will issue a briefing note and hold a webinar – email Stefan.Stoleriu@lcp.com to be added to the mailing list.