London & Quadrant Housing Trust has revealed a £15m deficit in its pension fund.
On top of this, the Bexley London Borough scheme, a separate fund that serves 13 of the staff transferred from Bexley council, is £558,000 in deficit.

Group finance director David Montague said the stock market crash was to blame for the low valuation of the funds in the London & Quadrant annual report published this week.

He said: "The last valuation was on 31 March when the country was at war and the stock market crashed, so it was the absolute worst timing for a valuation. The stock market has improved a bit since."

However, the deficit is more than balanced out by the reserves of London & Quadrant Group, the trust's parent, which went up by £23m to reach £137m in 2003. Montague said: "The liabilities wouldn't crystallise all at once so we are not concerned.

"If the worst happened and we had to recognise the loss, it would not be critical [because of the trust's large reserves]."

The trust will review pension contributions in April 2004. It closed its final salary scheme to new members and offered them a money purchase scheme in 2001.

The last valuation was at a time when the country was at war – the stock market has improved a lot since

David Montague, finance director, L&Q

The group's income exceeded projections largely because residents bought an extra £2.8m in shares of their homeownership properties in 2003 compared with the previous year. Montague said: "We were pleasantly surprised by the level of staircasing sales. These will help us build more homes. We want to develop and this is the surplus we need to do this and protect against the unexpected."

The group also made a surplus on some of its regeneration projects, which will be reinvested in the schemes concerned.

The group invested an extra £4m in the improvement and maintenance of homes. Its housing asset base increased by £97m to £1.4bn – funded by grants of £898m, loans of £378m and reserves of £130m. The year also saw the transfer of 2600 homes from Waltham Forest council to the group, followed by a £141m regeneration programme.

Last month another registered social landlord, Home Group, said it was in talks with staff and unions about raising pensions contributions after it emerged that its fund had a deficit of almost £5m, which looked set to increase (HT 20 June, page 14).

Source

Housing Today