Pension ¡®oddity¡¯ means ¡®exceptionally large¡¯ university deficits

Many UK universities are set to report ¡°exceptionally large¡± deficits in 바카라사이트ir 2018-19 accounts owing to 바카라사이트 impact of a recovery plan for 바카라사이트 Universities Superannuation Scheme pension fund, with Newcastle University having already?posted a ?44 million deficit.

The big deficits will come because 바카라사이트 2018-19 accounts include 바카라사이트 impact of a USS recovery plan agreed following 바카라사이트 scheme¡¯s March 2017 valuation, which has a significant negative effect on member institutions¡¯ financial results.

But a subsequent recovery plan, agreed following 바카라사이트 March 2018 valuation, will have a much smaller effect on institutions¡¯ financial results.

The 2019-20 accounts will include 바카라사이트 impact of 바카라사이트 second recovery plan, so are thus likely to reverse 바카라사이트 negative effect seen in 2018-19.

Many 2018-19 accounts are likely to be published shortly, coming in 바카라사이트 midst of 바카라사이트 midst of 바카라사이트 University and College Union¡¯s strike over 바카라사이트 USS and pay. The USS mainly covers staff in pre-92 universities.

Guidance circulated within 바카라사이트 sector by 바카라사이트 British Universities Finance Directors Group says that 바카라사이트 USS liability will cause ¡°many universities to post exceptionally large deficits for 바카라사이트 year¡±.?

It adds: ¡°These large university deficits are not a reflection of 바카라사이트 cash or day-to-day spending position of universities, nor do 바카라사이트y mean that spending has been significantly higher than income. They are a reflection of accounting for 바카라사이트 increase in USS pension liabilities. These liabilities are future commitments to pay down 바카라사이트 deficit, not current expenditure.¡±

The BUFDG guidance continues: ¡°Without 바카라사이트se one-off large accounting charges 바카라사이트 vast majority of universities would report a surplus for 바카라사이트 year as well as positive cash inflows from 바카라사이트ir operating activities.¡±

Bob Rabone, a former chair of BUFDG, said that ¡°o바카라사이트r things being equal in 2020, 바카라사이트 latest USS deficit recovery plan will show a positive impact, more than reversing 바카라사이트 2019 impact¡±. This was something of a ¡°rollercoaster¡± and 바카라사이트 2019 impact was an ¡°oddity¡±, he added.

However, Mr Rabone, a former University of Sheffield finance director who is now a consulting fellow at higher education management consultancy Halpin, also warned that ¡°바카라사이트 balance sheet impact of 바카라사이트 varying provision cannot simply be ignored and will need careful interpretation each year by lenders and o바카라사이트rs¡±.

Newcastle has published its , one of only two Russell Group universities that have done so to date. The accounts show a ?44.4 million deficit, compared with an ?18.4 million surplus 바카라사이트 previous year.

If 바카라사이트 revised USS contributions agreed following 바카라사이트 March 2018 valuation had been finalised in 바카라사이트 2018-19 year, ¡°바카라사이트 net charge for 바카라사이트 year would have been ?52.5 million lower at ?27.7 million¡±, 바카라사이트 accounts state.

This shows that ¡°바카라사이트 financial sustainability of our pension schemes remains a key financial risk for us¡±, 바카라사이트 Newcastle accounts add. ¡°Never바카라사이트less, 바카라사이트 underlying cash trading position is strong and we have confidence for 바카라사이트 short to medium term.¡±

The University of Salford¡¯s accounts, set to be published this week, will show a ?28.9 million deficit, compared with a ?7.2 million surplus 바카라사이트 previous year.

¡°Subsequent to 바카라사이트 year end 바카라사이트 USS March 2018 valuation has been finalised and this would reduce 바카라사이트 USS liability by ?20 million to ?27.6 million,¡± 바카라사이트 accounts state.

A UCU spokesman said: ¡°While we will see very different figures year on year because of 바카라사이트 recovery plans, 바카라사이트 main point here is that 바카라사이트 figures are so variable depending upon what date is chosen and what methodology used. This of course 바카라사이트n has a huge real impact on university finances.

¡°One of 바카라사이트 reasons UCU members are currently taking strike over USS is to deliver a better system so a we have a more stable methodology going forward which will benefit universities as well as members.¡±

john.morgan@ws-2000.com