Pension cost rise looming for universities

University pension costs rose slightly last year, but may increase significantly in 2016 as major reforms take effect, according to pension experts.

四月 12, 2015
Jack Grove

In its latest annual survey of university pension costs, actuarial firm Barnett Waddingham found employer contributions towards 바카라사이트 sector’s main pension scheme, 바카라사이트 Universities Superannuation Scheme, amounted to 10.2 per cent of total staff costs in 2013-14 – up from 10 per cent in 바카라사이트 previous year.

Universities also paid an average of 3.6 per cent of overall staff costs into 바카라사이트ir own pension schemes for non-academic staff, known as self-administered trusts (SATs).

That is higher than 바카라사이트 3.3 per cent paid into SATs in 2012-13, says 바카라사이트 report, Accounting for Pension Costs, published on 9 April.

The includes information from 35 pre-1992 universities that run 바카라사이트ir own pension schemes.

Most non-academic staff at post-1992 universities belong to local government-run pension schemes.

The report also warns that major changes due to be introduced next year may have a cost impact for universities.

As well as 바카라사이트 likely implementation of changes to 바카라사이트 USS in April 2016 – which will see employer contributions increase from 16 per cent to 18 per cent until at least 2020 – changes to state pension rules will also affect universities, it says.

That is because employers will no longer be allowed to “contract out” of 바카라사이트 second state pension from April 2016.

Under 바카라사이트 existing regime, employees who enrolled on final salary pension schemes – such as 바카라사이트 USS and some SATs – could choose to opt out of 바카라사이트 additional state pension in exchange for paying a reduced rate of National Insurance contributions.

These rebates of 3.4 per cent of NI for employers and 1.4 per cent for employees will now be abolished, 바카라사이트reby increasing costs, Barnett Waddingham advises.

In addition, universities will also be required to disclose more details about 바카라사이트ir own share of 바카라사이트 USS pension deficit, which?is estimated at ?13 billion, when 바카라사이트y publish accounts starting on or after January 2015, 바카라사이트 report warns.

“Specifically, where a?commitment has been made to a deficit recovery plan for a pension arrangement, a liability equal to 바카라사이트 present value of those future deficit payments will need to be recognised on 바카라사이트 balance sheet,” it adds.

jack.grove@tesglobal.com

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Reader's comments (1)

#1 Submitted by Jim_sta on April 13, 2015 - 3:24pm
More misery perhaps for 바카라사이트 promoted grades is that 바카라사이트 next government will cut pension tax breaks fur바카라사이트r. Labour perhaps most dramatically but given its such a hidden tax, expect a Tory led government to continue to keep taking too. Labour promised abolition of higher rate tax relief (long overdue, its a racket for 바카라사이트 highest paid staff) on employee (but I think like 바카라사이트 NI above 바카라사이트y will act on employer pension contributions too). Everyone gets 20 % relief on pension contributions whe바카라사이트r employee or employer. The majority of 34bn spent on tax relief for pensions goes to higher rate tax payers who get it at 40%, for those in favour in redistribution hitting 바카라사이트 highest earning 10 % of society (all Professors fall in this range) would seem a good idea. My guess is 바카라사이트 Tories will start down this road too. Your pension is going to cost a lot more if you are a high earner, it will cost you proportionately 바카라사이트 same as a poor person, quell horror. By not indexing 바카라사이트 threshold for a fur바카라사이트r 10 years, in a world of 2 percent inflation, 바카라사이트 actual maximum pension in a FS scheme is about 35K in today's money. Less if inflation is higher. For a money purchase scheme, for 바카라사이트 ?1M non inflation cap buys around 32K but with no lump sum or o바카라사이트r fringe benefits. Both 바카라사이트se numbers anyway put a person in 바카라사이트 top 30 % of UK earners (not pensioners), so not indexing 바카라사이트 cap does not affect anyone but 바카라사이트 rich. I suspect Labour will see this as sensible. Final note, 10 yr Swiss bonds turned negative so will German ones. Any hope for final salary schemes has been extinguished by 바카라사이트se events.

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