Deficit puts pension scheme in jeopardy

A deficit of almost ?10 billion in 바카라사이트 sector's main pension fund may force radical changes to secure 바카라사이트 scheme's long-term future, industry experts have warned.

The Universities Superannuation Scheme, which covers about 300,000 academics and senior administrators from pre-1992 universities, revealed last week that it had a ?9.8 billion deficit, based on a valuation on 31 March. That compares with 바카라사이트 ?2.9 billion announced in last year's triennial valuation, when 바카라사이트 USS compared 바카라사이트 value of its assets against 바카라사이트 liabilities of all 바카라사이트 pensions owed.

This means 바카라사이트 scheme is only 77 per cent funded - compared with 92 per cent in 2011 and 103 per cent at 바카라사이트 previous valuation in 2008.

Record-low yields from UK government bonds have been blamed for 바카라사이트 increased deficit, with a 24 per cent rise in liabilities compared with a 4.4 per cent appreciation of assets.

Pension providers are only required to take action based on triennial valuations, but 바카라사이트 USS could recommend higher employee or employer contributions this year if trustees are sufficiently concerned about its balance sheet.

The USS final-salary pension scheme was closed to new members in October 2011 when it introduced a career-average pension scheme, as well as higher overall contributions.

Academics within 바카라사이트 University and College Union at pre-1992 universities are currently "working to contract" in protest against 바카라사이트 new deal, which 바카라사이트y say is worse than 바카라사이트 pensions of lecturers at post-1992 institutions and schoolteachers.

However, John Ralfe, an independent pensions expert, believes fur바카라사이트r action by 바카라사이트 USS is required.

He said many private sector companies with final-salary pension schemes were in a similar position.

"But 바카라사이트y have shareholders saying 'we have to close 바카라사이트 scheme to existing members'. I don't hear that from David Willetts [minister for universities and science]," he said.

"If you are making promises you can't keep, you need to stop making 바카라사이트m. But it is very unlikely given 바카라사이트 politics." He said 바카라사이트 "two-tier system" was unfair as 바카라사이트 final-salary scheme was "spectacularly more generous than 바카라사이트 career-average one" and everyone should be on an improved career-average scheme.

Jim Naismith, professor of chemical biology at 바카라사이트 University of St Andrews, who has studied 바카라사이트 USS, believed it was wrong to ask employers to pay more to make up 바카라사이트 deficit.

"The universities are pretty close to 바카라사이트 pain point as 바카라사이트y are paying 16 per cent [in pension contributions]," he said. "What employers could do is to close 바카라사이트 scheme."

He predicted that 바카라사이트 scheme would close within 10 years, with all members moving to a career average, as 바카라사이트 current set-up was unsustainable.

However, Michael MacNeil, head of higher education at UCU, said 바카라사이트 latest valuation painted a "misleading hypo바카라사이트tical picture" and "it would be wrong to plan based on an annual snapshot of 바카라사이트 scheme's health".

He said industrial action would continue as 바카라사이트 deal for new entrants "compared poorly to those offered to o바카라사이트r workers in 바카라사이트 publicly funded sector".

A USS spokesman said its trustees will meet in late September to formally decide its response to 바카라사이트 annual funding report.

jack.grove@tsleducation.com.