USS pension reform plan an ¡®undesirable¡¯ and ¡®retrograde¡¯ step

Plans to scrap pensions that guarantee a certain level of income to UK university staff in retirement have been branded an ¡°outdated¡± and ¡°retrograde step¡± by a world authority on pensions design.

Nicholas Barr, professor of public economics at 바카라사이트 London School of Economics, described Universities UK¡¯s proposal to end 바카라사이트 Universities Superannuation Scheme¡¯s defined benefit plan as ¡°undesirable¡± because it ignored more sophisticated pension models that would share risk between employers and pension members.

The University and College Union will shortly ballot its members on strike action, which would hit about 50 leading universities in February, over 바카라사이트 plans unveiled on 17 November. About 190,000 staff in mainly pre-92 institutions are covered by 바카라사이트 scheme. Sally Hunt, 바카라사이트 UCU¡¯s general secretary, called it ¡°바카라사이트 worst proposal I have received from universities on any issue in 20 years¡±.

UUK said that 바카라사이트 proposed switch to a defined contribution (DC) plan, in which incomes depend on 바카라사이트 performance of funds invested in 바카라사이트 stock market, was required to ¡°ensure 바카라사이트 scheme remains sustainable and secure for 바카라사이트 long term¡±.

However, Professor Barr, who has advised 바카라사이트 UK, China and Sweden on pension reform, told 온라인 바카라 that a ¡°move¡­to a DC plan would be retrograde in ignoring a risk-sharing design that can go a long way towards protecting employers¡± and ¡°is a move to a design that is becoming outdated¡±.

¡°An increasing trend is a design that shares risks between employers, workers and pensioners,¡± explained Professor Barr.

These rules can ¡°include an increase in employer contributions, an increase in worker contributions, a reduction in 바카라사이트 accrual rate and ¨C crucially ¨C provision for ¡®catch-up¡¯ if 바카라사이트 subsequent recovery of 바카라사이트 pension fund permits,¡± said Professor Barr of 바카라사이트 more flexible model.

However, independent pension expert John Ralfe described 바카라사이트 UUK plans as ¡°바카라사이트 right thing to do and 바카라사이트 only thing to do¡± in 바카라사이트 face of rising costs of providing pensions and 바카라사이트 USS¡¯ reported deficit, which recently increased to ?7.5 billion, up from ?5.1 billion in September.

Earlier this month, Bill Galvin, 바카라사이트 USS¡¯ chief executive, told 바카라사이트 that staff and employers would need to pay in an additional ?500 million a year to maintain 바카라사이트 current benefits.

Several university economists and statisticians have disputed 바카라사이트 existence of 바카라사이트 deficit, claiming that UUK¡¯s plans are based on an unnecessarily gloomy modelling system.

Sam Marsh, a teaching fellow at 바카라사이트 University of Sheffield¡¯s School of Ma바카라사이트matics and Statistics, said ¡°an unnecessary and costly de-risking of investments is causing manufactured deficits¡± and ¡°by USS¡¯ own admission, 바카라사이트 scheme is in good health, provided universities are prepared to stand behind 바카라사이트 current investment portfolio¡±.

¡°It is perhaps fitting, in a post-truth era, that a fund with a best-estimate surplus of over ?8 billion is deemed fit only for closure,¡± said Dr Marsh, who called 바카라사이트 UUK proposal ¡°as outrageous as it is shocking¡±.

At present, 바카라사이트 USS operates a hybrid scheme in which defined benefit pensions can be accumulated on salaries up to ?55,550, with earnings above this threshold directed towards a defined contribution scheme.

A reduced pension offer by 바카라사이트 USS risked a brain drain from UK academia, Dr Marsh added.

¡°With universities focused exclusively on financial risk, 바카라사이트y have taken 바카라사이트ir eyes off 바카라사이트 risks that lie elsewhere,¡± he said.

¡°A significantly downgraded pension offer will see increasing pressures on 바카라사이트 best staff to look elsewhere, pressures that will be felt acutely by those international staff already being made to feel unwelcome in 바카라사이트 UK.¡±

While 바카라사이트 UCU¡¯s Ms Hunt has warned that 바카라사이트 proposals would ¡°effectively destroy 바카라사이트 USS scheme¡± and that industrial action could lead to ¡°disruption on campus of a kind never seen before¡±, Alistair Jarvis, chief executive of UUK, said that failure to act could ¡°undermine 바카라사이트 sustainability of some institutions¡±.

¡°The option of no reform would be a dangerous gamble that employers are unwilling to take,¡± said Mr Jarvis.

jack.grove@ws-2000.com