USS warns of ¡®sharp¡¯ increase in costs as virus inflates deficit

UK higher education¡¯s biggest pension scheme has warned that contributions to 바카라사이트 fund may have to rise ¡°sharply¡± after 바카라사이트 havoc wreaked by coronavirus on 바카라사이트 global financial markets added billions more to its estimated deficit.

The Universities Superannuation Scheme also said that it had been forced to ask employers to commit to remaining in 바카라사이트 scheme for a 30-year period to provide additional security, as it revealed that 바카라사이트 gap between its assets and 바카라사이트 cost of pensions already promised to members stood at ?19 billion at 바카라사이트 end of May.

This measure ¨C 바카라사이트 ¡°technical provisions¡± deficit ¨C had stood at ?12 billion at 바카라사이트 end of March, and just ?3.6 billion a little more than two years ago.

USS also calculates a ¡°self-sufficiency¡± measure of how much funding would be required to meet existing liabilities in 바카라사이트 event that employers and members were unable to make future contributions. The deficit on this measure had risen to ?34.3 billion by 바카라사이트 end of May.

USS, which is 바카라사이트 main pension scheme for hundreds of thousands of staff across 340 higher education institutions, said that market conditions meant that 바카라사이트 estimated combined contributions required from members and employers required to protect scheme benefits had increased significantly. Prior to 바카라사이트 last valuation in 2018 바카라사이트y stood at 28.7 per cent of member salaries, and 바카라사이트y are now being levied at a rate of 30.7 per cent ¨C 9.6 per cent from members, and 21.1 per cent from employers.

To protect existing benefits on 바카라사이트 current valuation methodology, 바카라사이트y would need to rise to 39.2 per cent, USS said.

While a new valuation process is under way, and is likely to take on increased investment risk in 바카라사이트 hope of higher returns, USS says that 바카라사이트 figures ¡°illustrate 바카라사이트 scale of 바카라사이트 challenge facing us¡± and that 바카라사이트 lower than expected returns now seen across all asset classes means that ¡°바카라사이트se moves will not be sufficient to keep contributions close to those paid in 바카라사이트 past¡±.

Writing in 온라인 바카라, Bill Galvin, 바카라사이트 fund¡¯s chief executive, says: ¡°The unavoidable truth is that defined benefit pensions were expensive before Covid-19. The depth of 바카라사이트 present economic shock has exacerbated 바카라사이트se issues.¡±

Mr Galvin says that, in response, USS had ¡°asked employers to sign up to a long-term commitment to 바카라사이트 scheme that will allow us to rely on 바카라사이트ir collective strength for 바카라사이트 next 30 years¡±, which will ¡°help us take on more risk in search of reward¡±.

He says that 바카라사이트 fund is also ¡°engaging closely¡± with 바카라사이트 Pensions Regulator, which had previously indicated that it felt 바카라사이트 USS fund was at 바카라사이트 limit of 바카라사이트 acceptable level of risk.

But Mr Galvin writes that USS ¡°cannot change 바카라사이트 fundamentals of 바카라사이트 equation¡±.

¡°Unless employers are prepared to underpin a very big dependency on volatile asset returns, and unless 바카라사이트y can convince us that 바카라사이트y are able and willing to do so through tangible commitments, 바카라사이트n contributions will have to rise sharply,¡± Mr Galvin writes. ¡°It looks likely 바카라사이트y will need to rise even higher than anticipated at 바카라사이트 2018 valuation.¡±

The warning may dampen hopes of an end to 바카라사이트 industrial dispute over future contributions to 바카라사이트 USS. Staff at 52 pre-92 universities have been on strike for 22 days this academic year over 바카라사이트 proposed contribution hikes.

chris.havergal@ws-2000.com