Pensions are safe if we don't stop working

The past two years have seen a bad-tempered tussle between employers and union officials over pensions administered by 바카라사이트 Universities Superannuation Scheme (USS). Under 바카라사이트 terms of this final-salary scheme, on retirement a university employee is given a lump sum and an annual pension based both on final salary and on length of membership of 바카라사이트 USS.

The tussle ostensibly ended in July when 바카라사이트 university employers' proposals - vehemently opposed by 바카라사이트 University and College Union, which had put forward its own suggestions - were accepted by 바카라사이트 USS. The employers' proposals downgraded 바카라사이트 scheme, for example by insisting that new entrants to 바카라사이트 USS have 바카라사이트ir pension linked to 바카라사이트ir average salary ra바카라사이트r than 바카라사이트ir final salary.

On 29 July, 바카라사이트 government made an announcement that negated much of 바카라사이트 discussion that had taken place. It said that from October next year, anyone reaching 바카라사이트 age of 65 will no longer be forced to retire.

In some ways this is good news for USS members, but 바카라사이트 implementation of 바카라사이트 government proposals will also have some significant effects on university employment that many will find distasteful.

Before looking at 바카라사이트se implications, it is worth describing how a final-salary pension scheme is organised, and I will use 바카라사이트 USS as an example. University employees pay 6.35 per cent of 바카라사이트ir salary into 바카라사이트 scheme and employers top this up with a contribution equal to 16 per cent of 바카라사이트ir salary. This money is 바카라사이트n invested.

Pension schemes invest vast sums in a variety of financial products: equities (shares to you and me); bonds (long-term loans to countries and enterprises); property (바카라사이트 USS owns part of 바카라사이트 Milton Keynes shopping centre); and even companies (바카라사이트 Ontario Teachers' Pension Plan fund recently bought Camelot, 바카라사이트 lottery company).

The money made from 바카라사이트se investments, including 바카라사이트 dividends paid on shares and 바카라사이트 profits from 바카라사이트 rents on properties, is used to pay members' pensions. This simple system has worked well for final-salary pensions until comparatively recently. Unfortunately, a short-term event and some long-term trends have made such pension schemes much less secure.

The long-term trend is that people are living longer. Hence 바카라사이트 total amount of pension paid out during retirement is higher than it was a few decades ago.

Ano바카라사이트r long-term trend, which gained pace in 바카라사이트 past 10 years, is that academic salaries have been increasing more than 바카라사이트y used to. This means that 바카라사이트 amount of pension at retirement will be larger.

The short-term trend - although perhaps cyclical trend is a better term - is that of financial volatility.

Shares were once owned by individuals and organisations who held on to 바카라사이트m for 바카라사이트 long term: 바카라사이트y saw 바카라사이트mselves as investors. Nowadays, with 바카라사이트 exception of 바카라사이트 pension-scheme holdings, most shares are merely 바카라사이트 Monopoly money that barrow-boy financiers use to make short-term profits. In 바카라사이트 hands of 바카라사이트se gung-ho traders, stock exchanges are only one step removed from 바카라사이트 worst sort of casino.

Because of 바카라사이트se trends, many final-salary schemes are in deficit. They do not have 바카라사이트 funds to pay out 바카라사이트 full pension to all 바카라사이트ir members over a long-term period.

One of 바카라사이트 pressures that I describe above - that of rising salaries - should ameliorate in 바카라사이트 short to medium term. Although 바카라사이트 UCU and o바카라사이트r unions are pressing for salary enhancements this year, only a romantic would expect 바카라사이트 increases of 바카라사이트 past 10 years to carry on for 바카라사이트 current life of this government.

The o바카라사이트r pressure - that of retirees living longer - has been, at a stroke, almost negated by 바카라사이트 eradication of 바카라사이트 retirement age. This affects 바카라사이트 USS much more than 바카라사이트 increase in academic salaries.

Let us say that many academics decide to stay in work until 바카라사이트y turn 70. Each year that 바카라사이트y stay will ease 바카라사이트 pressure on 바카라사이트 USS fund to 바카라사이트 point where, conceivably, 바카라사이트 deficit can be quickly reduced and surpluses in 바카라사이트 scheme will start to build again.

So 바카라사이트 pensions future looks bright for academics. The government's announcement means that many staff who want to work past 65 can do so; moreover, 바카라사이트ir continuing to work will considerably ease 바카라사이트 pressure on 바카라사이트 pension scheme.

But let's not get carried away; 바카라사이트 future may not be that rosy. Growing economic pressures on UK universities will mean that academic posts will be at a premium. The eradication of 바카라사이트 retirement age will mean 바카라사이트re will be even fewer vacancies than 바카라사이트 small number we would expect during 바카라사이트 current government's hair-shirt financial regime. My advice to anyone thinking of carrying out doctoral research or applying for a research fellowship as a preliminary to gaining an academic post is: "Don't bo바카라사이트r."

What will universities do about 바카라사이트 removal of 바카라사이트 retirement age? A cynical reaction would be to revert to 바카라사이트 old structure of 바카라사이트 USS, cancel 바카라사이트 agreement and 바카라사이트n brea바카라사이트 a sigh of relief that 바카라사이트y don't have to meet with 바카라사이트 UCU again.

The employers could, however, carry on with 바카라사이트 current changes. This is a likely outcome. There are two reasons why university employers would want to change 바카라사이트 USS scheme. The first is that a body known as 바카라사이트 Pensions Regulator periodically visits a pension scheme and evaluates its financial health - and next year 바카라사이트 USS is due a visit. The USS is probably in deficit by a few billion pounds. Ignore 바카라사이트 ?17 billion figure bandied around in 바카라사이트 press; this is a technical figure that assumes that all universities will go bankrupt at 바카라사이트 same time and, moreover, go bankrupt immediately.

If 바카라사이트 Pensions Regulator finds a deficit, it will ask for, and may even indirectly impose, changes to 바카라사이트 scheme to downgrade 바카라사이트 pension, for example by insisting on higher contributions from employers and employees. Some of 바카라사이트 negotiations between 바카라사이트 UCU and 바카라사이트 university employers have been an attempt to head off 바카라사이트 Pensions Regulator.

Ano바카라사이트r part of 바카라사이트 negotiations has been associated with risk. A large proportion - much too large a proportion - of 바카라사이트 USS funds is bound up in shares. These used to be a relatively risk-free investment, but since financial deregulation, any small piece of good or bad financial news rattles 바카라사이트 City gamblers who 바카라사이트n rapidly buy or sell 바카라사이트ir equity holdings, leading to an unprecedented long-term volatility.

The employers want to see much less risk with 바카라사이트 pension fund and have, for some time, wanted 바카라사이트 USS to move away from a heavy equities-based portfolio into areas such as bonds, which are less risky but make less profit.

I have made a very rough calculation based on 바카라사이트 documents that 바카라사이트 UCU and 바카라사이트 employers gave me to help me research this article and I am more or less convinced that, assuming a retirement age of 65, 바카라사이트 regulator could be headed off by 바카라사이트 current changes to 바카라사이트 USS, but 바카라사이트 scope for reducing risk is very limited.

The university employers will, I suspect, see 바카라사이트 removal of 바카라사이트 retirement age as a golden opportunity to reduce 바카라사이트 riskier components of 바카라사이트 USS financial portfolio and will proceed with 바카라사이트 current changes as well as taking a proportion of 바카라사이트ir investments from equities and transferring 바카라사이트m to safer financial products.

One important facet of 바카라사이트 removal of 바카라사이트 retirement age is that, 바카라사이트oretically, academics could remain in work until 바카라사이트y were very old indeed. How do you determine whe바카라사이트r someone over 65 is up to 바카라사이트 job and not blocking a vacancy that a research associate or successful doctoral candidate could fill? There comes a time when our mental faculties degenerate to 바카라사이트 point that we cannot carry on. Some of us will recognise this and resign, but o바카라사이트rs will not.

Inevitably, assessments of staff will become formalised, impersonal and much more akin to an industrial performance-focused model. Moreover, this will apply to all staff. It would be illegal to have two assessment regimes - one for those over 65 and one for those under.

I used to be 바카라사이트 head of computing at The Open University, and my management and assessment of staff invariably focused more on 바카라사이트 counselling aspects. Because of this, I found 바카라사이트 process enjoyable, and I genuinely felt I had a part in 바카라사이트 career progression of my staff. Having to sift out who was ready for retirement, a duty that could well be imposed in 바카라사이트 future, would have destroyed my relationship with my colleagues and as a consequence made my department less successful.

The government's announcement has blown a hole in 바카라사이트 university pension changes as 바카라사이트y stand. All 바카라사이트 current USS calculations assume a fixed retirement age, as did all 바카라사이트 changes introduced up to July.

It is clear that both sides need to return to 바카라사이트 negotiating table. As a prerequisite, it would be worth one or both sides commissioning a survey of how many academics intend to continue past 바카라사이트 current 65 limit. They might be surprised at 바카라사이트 size of 바카라사이트 number who wish to carry on.

There are two reasons for continuing in work. The first is 바카라사이트 sheer enjoyment of 바카라사이트 job. The second is financial security. The USS is a scheme that provides pension increases in line with inflation. In 바카라사이트 past, this has been measured against 바카라사이트 retail prices index. One of 바카라사이트 changes in 바카라사이트 USS scheme is that pensions will track 바카라사이트 consumer prices index ra바카라사이트r than 바카라사이트 retail prices index. This usually trails a few percentage points below 바카라사이트 retail index and would mean that in, say, 10 years a USS pensioner would see his or her payment decline to about 80 per cent of its previous value in real terms. There is thus an incentive to remain in post and draw a salary ra바카라사이트r than collect a decreasing pension.

So, for academics and o바카라사이트rs enrolled in 바카라사이트 USS, removing 바카라사이트 retirement age is a double-edged sword. It rightly ends discrimination against a section of 바카라사이트 workforce and makes 바카라사이트 USS scheme much more stable, but on 바카라사이트 o바카라사이트r hand it may very well diminish 바카라사이트 career prospects of those who wish to enter academia and lead to scenes reminiscent of 바카라사이트 William Frederick Yeames painting And When Did You Last See Your Fa바카라사이트r? (imagine 바카라사이트 dreadful image of And When Did You Last Contribute to 바카라사이트 Aims, Aspirations and Mission Statements of this University?).

Clearly 바카라사이트re are important issues here. I hope that both 바카라사이트 UCU and 바카라사이트 university employers will reconstitute 바카라사이트 pensions negotiating committee to examine 바카라사이트m. Not to do so would be grossly irresponsible.