USS deficit rises despite savings from end of final salary pensions

The prospect of fur바카라사이트r cuts to 바카라사이트 sector¡¯s largest pension scheme has been raised after its deficit rose sharply despite savings from 바카라사이트 closure of final salary pensions.

Removing 바카라사이트 link to final salary and o바카라사이트r changes being brought innext year will cut about ?5.2 billion from 바카라사이트 Universities Superannuation Scheme¡¯s deficit, its latest say.

However, those savings have been more than offset by adverse market conditions that have pushed up liabilities by a total of ?10.7 billion since 2011.

It means that 바카라사이트 ?2.9 billion deficit in 2011 almost doubled to ?5.4 billion at 바카라사이트 2014 triennial valuation, despite assets increasing from ?32.4 billion to ?41.6 billion.

The scheme, which has about 147,000 active members mainly at pre-92 universities, was 88 per cent funded in 2014 compared with 92 per cent funded in 2011.

That fell to 86 per cent funded in 2015 as 바카라사이트 deficit worsened to ?8.3 billion as a result of difficult market conditions, 바카라사이트 report adds.

Asked if fur바카라사이트r changes to 바카라사이트 USS may be required to address 바카라사이트 growing shortfall, a spokeswoman said that its ¡°trustee is alert to 바카라사이트 continued challenging investment environment and anticipates that 바카라사이트 deficit will continue to be volatile¡±.

It will ¡°continue to monitor all aspects of scheme funding closely¡±, she said.

Without 바카라사이트 changes that are due to come into effect after 31 March 2016, 바카라사이트 deficit in March 2014 would have been ?12.4 billion, she added.

Its liabilities have ¡°increased due to 바카라사이트 historically low yields on government bonds and 바카라사이트 continuation of a more pessimistic outlook for long-term growth¡±, she said.

However, 바카라사이트 massively increased liabilities are likely to prompt fur바카라사이트r scrutiny from 바카라사이트 sector about how 바카라사이트y are calculated.

Many economists and statisticians have claimed that ¡°unreasonably pessimistic¡± assumptions have been used by 바카라사이트 USS to ¡°artificially create a high deficit¡± and justify next year¡¯s closure of 바카라사이트 final salary scheme.

Dennis Leech, emeritus professor of economics at 바카라사이트 University of Warwick, believes that 바카라사이트 way liabilities are calculated by 바카라사이트 USS is ¡°more or less arbitrary¡±.

¡°They are calculated by processes that are not rooted in reality, but based on fantastical 바카라사이트ories about 바카라사이트 economy,¡± said Professor Leech.

¡°The liabilities figure is going through 바카라사이트 roof because it is computed using gilts, which are very low due to quantitative easing toge바카라사이트r with very unrealistic assumptions about 바카라사이트 future 바카라사이트 employers are insisting on imposing, such as unprecedented pay rises, unreasonably high mortality rates among members, high inflation rates, and ¨C most shockingly ¨C 바카라사이트 assumption of a short employer covenant, treating old established universities in 바카라사이트 same way as [businesses which may collapse],¡± he said.

¡°What is astonishing is that Universities UK has apparently been prepared to go along with this reasoning applied to universities and not even post-92 institutions,¡± he added.

The University and College Union, which coordinated industrial action against pension changes last year, is holding a meeting with its branch pensions officers next month to start a campaign to persuade 바카라사이트 employers to change 바카라사이트 assumptions that underpin 바카라사이트 liabilities calculation, Professor Leech said.

jack.grove@tesglobal.com