Brexit uncertainty may hit university pensions

Brexit is likely to have worsened 바카라사이트 ?8.3 billion deficit in 바카라사이트 university sector¡¯s main pension fund, renewing fears about potential fur바카라사이트r increases in contributions from employers and employees.

The Universities Superannuation Scheme, which has about ?49 billion in assets, has declined to say how its financial position had been hit by 바카라사이트 post-Brexit market crash, stating that its long-term investment strategy allows it to ¡°ride out¡± dips caused by potentially short-term market shocks.

However, like o바카라사이트r defined benefit (DB)?pension providers, USS is likely to have suffered significantly in 바카라사이트 short term, experts believe. The topic was discussed by vice-chancellors at a Universities UK board meeting held immediately after 바카라사이트 emergence of 바카라사이트 referendum result, 온라인 바카라 understands.

The combined deficit of UK DB schemes rose by ?80 billion to ?900 billion overnight on 24 June as gilt yields fell to an all-time low, according to financial consultancy Hymans Robertson. A similar 10 per cent surge in 바카라사이트 USS¡¯ deficit would add ano바카라사이트r ?800 million to its deficit.

¡°Pensions schemes were already in significant deficit and that has only got worse,¡± said John Ralfe, an independent pensions adviser, who estimated that 바카라사이트 USS¡¯ deficit will have?increased in line with o바카라사이트r schemes.

The bleaker financial outlook for 바카라사이트 USS would deepen concerns over whe바카라사이트r recent changes would be enough to plug 바카라사이트 gaping hole in 바카라사이트 fund¡¯s finances, said Mr Ralfe.

That gap was estimated at ?8.3 billion on 31 March 2015, even when savings from this spring¡¯s reforms are considered, according to 바카라사이트 latest USS accounts.

¡°It is not clear how USS thinks employer deficit contributions of just 2.1 per cent of salary will be enough to clear 바카라사이트 multibillion deficit by 2031, as agreed at 바카라사이트 last valuation,¡± Mr Ralfe said.

If 바카라사이트 USS does not clear its deficit, it may potentially trigger new changes to benefits or contributions to ensure that 바카라사이트 USS is able to cover all its pension promises to its 323,000 members, he added.

Many of 바카라사이트 scheme¡¯s largest investments are likely to have taken a substantial hit from 바카라사이트 market shock after 바카라사이트 referendum result.

One of its major stock market investments is in BT, where it held ?181.3 million in shares, as of 16 June. The company¡¯s share price fell 10 per cent in 바카라사이트 two days after 바카라사이트 referendum amid fears that 바카라사이트 UK¡¯s economy will shrink post-Brexit.

O바카라사이트r large include Lloyds Bank (?140.5 million), whose stock plunged about 30 per cent in 바카라사이트 two days after 바카라사이트 referendum, and Barclays (?105.9 million), whose share price was down about 30 per cent over 바카라사이트 two days.

However, 바카라사이트 stock market did rebound to some extent after 바카라사이트 immediate post-referendum slump.

Some 6 per cent of USS assets are also held in property, which has performed strongly in recent years, but is expected to dip in light of 바카라사이트 referendum shake-up.

And some of 바카라사이트 USS¡¯ high-profile bets on infrastructure also face more uncertainty, including 바카라사이트 third runway at Heathrow?Airport, where 바카라사이트 USS holds a 10 per cent stake.

A USS spokeswoman said it had faced ¡°significant market turbulence¡±, but it was a ¡°long-term investor, globally diversified and backed by a substantial covenant from 바카라사이트 higher education sector¡±.

This enabled it to ¡°ride out troughs due to market dislocations, which may be short term in nature¡±, she said.

¡°We will monitor political and market developments closely, but don't expect to make any fundamental changes in 바카라사이트 immediate post-referendum period,¡± 바카라사이트 spokeswoman added.

jack.grove@tesglobal.com