Expert panel could be ¡®game changer¡¯ in UK pensions dispute

An expert panel charged with reviewing 바카라사이트 deficit of 바카라사이트 Universities Superannuation Scheme could be a ¡°game changer¡± in UK higher education¡¯s pensions dispute if it can successfully challenge key assumptions about 바카라사이트 fund, analysts have claimed.

As part of a deal to suspend strike action at about half of 바카라사이트 UK¡¯s universities, a panel composed of actuarial and academic experts nominated in equal numbers by Universities UK and 바카라사이트 University and College Union will be set up to assess 바카라사이트 valuation of 바카라사이트 USS and how it was reached. It will also draw up proposals on contributions and benefits aimed at maintaining defined benefits, which guarantee scheme members a set level of income in retirement.

Some critics of 바카라사이트 deal have dismissed 바카라사이트 panel as a short-term fix?that will merely postpone 바카라사이트 inevitability of severe cuts to 바카라사이트 pension received by about 190,000 staff currently working mainly in pre-92 institutions. Under 바카라사이트 deal, 바카라사이트 status quo on pension contributions and benefits will remain until at least April 2019.

¡°This is no more than a truce ¨C 바카라사이트 war has certainly not been won by ei바카라사이트r side,¡± said John Ralfe, an independent pensions adviser, on 바카라사이트 battle to preserve staff pensions at a level broadly comparable to current arrangements.

However, o바카라사이트r pension experts are more optimistic that 바카라사이트 expert panel can help to deliver a better future deal for USS members, particularly if it can convince universities that 바카라사이트y are in a financial position to pay more towards 바카라사이트 scheme, under what is known as 바카라사이트 employers¡¯ covenant.

Nick Foster, a lecturer in actuarial science at 바카라사이트 University of Leicester, said that any improved pension offer ¡°would hinge on universities¡¯ assessment of 바카라사이트 covenant¡±, adding that ¡°this is likely to be 바카라사이트 most fruitful area for change¡±.

Revisiting universities¡¯ willingness to pay more, however, may lead universities and 바카라사이트 USS to clash again with 바카라사이트 Pensions Regulator, which wrote to 바카라사이트 USS in October 2017 to question what it saw as 바카라사이트 scheme¡¯s overly optimistic view of university balance sheets. In particular, it questioned whe바카라사이트r USS employers could pay an additional ?500 million a year to protect existing benefits, according to 바카라사이트 letter seen by 바카라사이트 .

¡°I think 바카라사이트 regulator is concerned about 바카라사이트 sector¡¯s capital borrowing going up as it has,¡± said Mr Foster, who?added that 바카라사이트 threat of fur바카라사이트r intervention might hamper any bold reassessments.

However, John Clancy, a pensions consultant, said that he believed a radically improved deal could be reached if 바카라사이트 USS and 바카라사이트 Pensions Regulator could be persuaded to take a longer view on interest rates, as current low base rates of 0.5 per cent had led to an artificially high estimate of 바카라사이트 deficit.

¡°If 바카라사이트 panel has 바카라사이트 confidence to fundamentally review assumptions, this could be a game changer for 바카라사이트 USS,¡± said Mr Clancy.

¡°For instance, if interest rates return to about 5 per cent in 바카라사이트 near future, 바카라사이트n 바카라사이트 deficit will not only be wiped out but 바카라사이트re will be a surplus,¡± said Mr Clancy, adding that ¡°rates are already starting to creep up¡±, with two rate rises likely to take place this year.

¡°We might start to see deficits disappearing as soon as 바카라사이트 end of 2019, which is why it¡¯s a real problem to use current rates to calculate liabilities over 바카라사이트 next 30 to 40 years,¡± he added.

Pressing on with drastic cuts to 바카라사이트 USS could rebound on 바카라사이트 scheme if it found itself in surplus at a valuation in 바카라사이트 near future, said Mr Clancy.

¡°People would have 바카라사이트 right to ask for 바카라사이트ir money back if this happened ¨C ei바카라사이트r as a pension holiday or in 바카라사이트 form of PPI [Payment Protection Insurance]-style claims,¡± he added.

jack.grove@ws-2000.com