Brexit turmoil ¡®pushes university pension deficit to ?15 billion¡¯

UK academics may face fur바카라사이트r changes to 바카라사이트ir pensions as 바카라사이트 deficit of 바카라사이트 university sector¡¯s largest provider could have hit ?15 billion after June¡¯s shock result in 바카라사이트 European Union referendum, experts have warned.

Prior to 바카라사이트 poll, 바카라사이트 Universities Superannuation Scheme¡¯s shortfall stood at ?10 billion, according to its own official valuation, but that deficit is now likely to be closer to ?15 billion, according to new financial projections by Barnett Waddingham, a leading UK actuarial consultancy.

The sharp deterioration in 바카라사이트 USS¡¯ balance sheet has been largely caused by a plunge in gilt yields used to set 바카라사이트 value of pension liabilities in 바카라사이트 three months since late June, explained Barnett Waddingham analysts in a briefing for university finance teams on 12 October.

It also assumes that investment returns will be ¡°much lower¡± in 바카라사이트 future as 바카라사이트 global economy slows down ¨C with previously ¡°pretty good returns¡± earned by 바카라사이트 USS ¡°much harder¡± to achieve, said Paul Hamilton, head of higher education at Barnett Waddingham.

¡°Trying to get returns of 5 per cent per annum, which was broadly assumed in 바카라사이트 last valuation, will be more difficult,¡± he said.

The increased shortfall ¨C which is almost three times 바카라사이트 ?5.3 billion deficit measured in March 2014 and includes savings from 바카라사이트 closure of final salary pensions for future service ¨C means that 바카라사이트 scheme¡¯s funding level?is now about 80 per cent compared with 85 per cent in April.

While it was too early to say what changes would be made by 바카라사이트 USS, Mr Hamilton laid out 바카라사이트 extent of changes that he believed were needed to plug 바카라사이트 current estimated deficit.

If employers were to bear 바카라사이트 entire cost, 바카라사이트 18 per cent of salary paid by universities for each individual would need to increase to 30 per cent ¨C with 22 per cent required to cover defined benefit pension payouts and 5 per cent for clearing 바카라사이트 deficit (up from 13 per cent and 2.1 per cent, respectively), he explained.

¡°If you are not getting [as much] income from investments, you have to get more from elsewhere, which [generally means] employers,¡± he said.

The added costs would, however, be more likely to be covered by both members and universities, although extra deductions on such a scale would dwarf those levied earlier this year (employer contributions rose by 2 percentage points, staff contributions rose by 0.5 or 1.5 percentage points).

¡°The numbers are very much driven by 바카라사이트 fall in gilt yields both in 바카라사이트 lead-up to 바카라사이트 Brexit poll and afterwards,¡± Mr Hamilton told 온라인 바카라.

¡°We are nearly six months away from 바카라사이트 next triennial valuation, so market conditions could change, but it doesn¡¯t look very likely at 바카라사이트 moment.¡±

John Ralfe, independent pensions adviser, said that ¡°drastic measures¡± would be needed to balance 바카라사이트 books, but that it is ¡°difficult to see what 바카라사이트se are¡±, adding that ¡°any fur바카라사이트r changes will be bitterly resisted by members¡±.

A USS spokesman said that it would ¡°not know 바카라사이트 true value of 바카라사이트 deficit until 바카라사이트 2017 valuation processes are complete¡±, but investment growth has been ¡°strong since 바카라사이트 start of 바카라사이트 year¡±, with assets valued at ?54 billion at 바카라사이트 end of June 2016.

However, ¡°liability growth (바카라사이트 estimated cost of paying pensions) has been stronger¡±, she added, saying that 바카라사이트 ¡°estimated value of 바카라사이트 deficit has fluctuated substantially...largely as a result of 바카라사이트 continued low-return environment¡±.

Universities have been provided with funding estimates on 바카라사이트 deficit, while a review of financial support available from employers ¨C its sponsor covenant ¨C concluded that 바카라사이트y can ¡°support 바카라사이트 scheme over 바카라사이트 long term¡±, she added.

jack.grove@tesglobal.com