SHAPS accounting changes on the horizon

TPT Retirement Solutions (TPT) recently sent two important ‘accounting changes’ communications to housing associations. The changes are relevant to housing associations participating in the Scottish Housing Associations’ Pension Scheme (SHAPS).

The first communication, issued by email in June, set out ‘what to expect’ from the proposed accounting changes for SHAPS. A timeline and related FAQs document were also provided, and can be found on TPT’s website.

The second update was issued in July and provided housing associations with indicative costs of the defined benefit (DB) accounting approach, together with details of additional options they may wish to consider to help with budget setting.

In addition, TPT asked housing associations to complete a short electronic form by Friday 17 August 2018. Responses will ensure that TPT provides SHAPS employers with options that meet their accounting needs.

If you have received the update from TPT, but are yet to complete the form, you should read the email carefully before doing so.  A link to the form, together with a copy of the email specific to your housing association can be obtained by contacting frs102@tpt.org.uk – a summary of the main points can be found below.

TPT is developing an online accounting modeller which will produce the documents required for full DB disclosure. The modeller is scheduled to be available from May 2019 for financial years ending 31 March 2019 onwards.

TPT will also provide additional guidance and background data which will include supporting information for auditors, together with a central assurance report (under ISAE 3402) to give comfort over the numbers prepared. 

Costs

A pricing structure, consisting of two elements, has been set by TPT - a ‘per employer’ charge to cover fixed costs and a ‘per member’ charge to cover variable member cashflow costs. This means that housing associations with a small number of members will pay less than a housing association with a large number of members. In addition to this, there will be a one-off charge in the first year to cover implementation costs.

TPT is currently finalising the method and processes for actuarial, audit assurance, data, IT and legal elements to ensure that the solution is delivered as cost effectively as possible. As such, TPT intends to provide final confirmation of costs in October. 

Additional options

The costs described above relate to the 'Annual Access' solution that will be made available by TPT. In addition, TPT is proposing to develop two extra options to assist housing associations’ budgeting processes. The two options, which will be offered if there is sufficient demand, are:

Extended Solution (an additional annual cost will apply):

• The DB accounting modeller will be accessible for every month-end to allow assessment of movements and prepare monthly, quarterly or interim updates as desired.
• A forecast of the next year’s income and expenditure statement will be included.
• A table summarising the sensitivity of the balance sheet position to the key assumptions will be included (IAS19-style best practice information).     

Indicative Impact of the accounting change (a one-off cost will apply):

• TPT is proposing to offer a one-off summary paper in December 2018, setting out the key differences between the existing and proposed DB accounting approaches. 

Electronic form

As mentioned above, the short electronic form should be completed by Friday 17 August 2018. A link to the form can be obtained by contacting frs102@tpt.org.uk

Responses to the form will enable TPT to understand whether there is sufficient interest to build the solutions for the two additional options.