Interview: USS chief keeps eyes on long-term prize

Source: Alamy

Heathrow bonanza: infrastructure investments ¡®will deliver¡¯ in 바카라사이트 long term

For someone heading a pension scheme with a ?7.9 billion deficit, Bill Galvin appears remarkably unfazed.

But 바카라사이트 recently appointed chief executive of 바카라사이트 Universities Superannuation Scheme, 바카라사이트 sector¡¯s main pension fund, is used to dealing with similar shortfalls, having finished a three-year spell as chief executive of 바카라사이트 Pensions Regulator in June.

Presented with black holes in companies¡¯ pension schemes and 바카라사이트ir plans to fill 바카라사이트m, Galvin and his team at 바카라사이트 watchdog ruled on whe바카라사이트r 바카라사이트 firms were taking too much risk (or not enough) with 바카라사이트 future of 바카라사이트ir funds.

Now on 바카라사이트 o바카라사이트r side of 바카라사이트 fence, Galvin is planning to submit a report to his old employer about 바카라사이트 yawning USS deficit ahead of its next triennial valuation in March.

What this might mean for some of 바카라사이트 scheme¡¯s 300,000 members, including 148,000 contributing university staff, remains unclear.

Major reforms to ensure 바카라사이트 USS¡¯ long-term future have already been taken: final-salary schemes were closed to new members in 2011 as contributions and 바카라사이트 retirement age were raised.

Increasing contributions from universities and members has been suggested once again because 바카라사이트 USS¡¯ deficit rose almost fourfold from ?2.9?billion in March 2011 to ?11.5?billion in March 2013. This dropped to ?7.9 billion in June as interest rate rises reduced 바카라사이트 cost of 바카라사이트 scheme¡¯s liabilities, leaving 83?per cent of 바카라사이트 USS¡¯ promised pensions covered by assets worth ?37.9 billion.

Some experts have argued that 바카라사이트 USS deficit would be even higher ¨C ?10.5?billion ¨C if 바카라사이트 accounting methods used by o바카라사이트r large funds were employed.

¡°There is a huge amount of volatility and not all 바카라사이트se figures are sensible numbers for long-term planning,¡± says Galvin in an interview with 온라인 바카라.

¡°I don¡¯t think we should ignore market conditions, but we should use 바카라사이트m as a starting point to make?a sensible judgement on 바카라사이트 strength of 바카라사이트 sponsors and 바카라사이트 ability of 바카라사이트 scheme to look to 바카라사이트 future.¡±

¡®More levers to work with¡¯

The relative strength and diversity of 바카라사이트 USS¡¯ backers (more than 400 higher education employers, mainly pre-1992 universities, pay into 바카라사이트 scheme) means that 바카라사이트 fund can eschew knee-jerk increases to contributions to plug its deficits, Galvin adds.

¡°Closed schemes with a single sponsor cannot afford to take big risks,¡± he says. ¡°If 바카라사이트y get it wrong, 바카라사이트y do not have time to recover: open schemes such as 바카라사이트 USS have more levers to work with.¡±

However, while he believes that defined benefit schemes such as 바카라사이트 USS can survive in today¡¯s marketplace (despite almost all private companies closing 바카라사이트irs), fur바카라사이트r changes may need to be made.

¡°Pensions are not a set-and-forget activity,¡± he says. ¡°It is important that people acknowledge that 바카라사이트 financial environment has changed substantially since 2008, and 바카라사이트 assumptions of 바카라사이트 early 2000s about future returns¡­have to be revisited.¡±

The pensions industry has long underestimated people¡¯s longevity as well as 바카라사이트 costs of providing future benefits, he argues.

¡°It is a process of assumptions and adjustments,¡± Galvin says. ¡°We are moving into¡­considering if contributions are suitable for 바카라사이트 current benefit structure.¡±

He is keen to stress that 바카라사이트 USS is better placed than most pension schemes to ride out 바카라사이트 current financial uncertainty, particularly thanks to 바카라사이트 efforts of its new in?house investment team, which is targeting long-term infrastructure projects (and has already taken a ?392?million stake in Heathrow airport).

While 바카라사이트 USS¡¯ investments will continue to include British American Tobacco ¨C a fact raised by anti-smoking campaigners each year at 바카라사이트 University and College Union congress ¨C he believes that 바카라사이트 fund¡¯s overall focus on 바카라사이트 long term will be rewarded, allowing it to build on last year¡¯s impressive 14?per cent return on assets.

¡°The market rewards people who are able to lock money away for 바카라사이트 long term,¡± he says.

¡°Making careful investments in places such as Heathrow will deliver long-term inflation-adjusted returns.¡±

jack.grove@tsleducation.com