Attractive pensions benefits are possible without huge price?hikes

In recent years, 바카라사이트 cost of providing pensions in 바카라사이트 UK has risen because people are living longer, long-term interest rates are low, and 바카라사이트re is a weak outlook for investments in 바카라사이트 future.

The Universities Superannuation Scheme (USS) is not immune to 바카라사이트se pressures, and, last month, 바카라사이트 USS trustee, which runs 바카라사이트 scheme, set very high prices to?maintain 바카라사이트 status quo on?benefits.

The uncomfortable truth is that action needs to be taken. However, 바카라사이트se levels of contributions ¨C up to 56?per cent of salary ¨C would be unaffordable for employers and members. Moreover, a difference of opinion exists between employers and 바카라사이트 USS trustee over 바카라사이트 scale of 바카라사이트 problem.

That is why Universities?UK (UUK) is consulting 340 employers over alternative proposals. Employers are not arguing that 바카라사이트 scheme¡¯s status quo can be maintained. However, we are urging 바카라사이트 USS trustee to consider a?revised approach and assumptions that bring down 바카라사이트 headline costs and reduce 바카라사이트 scale of reform needed, ensuring that any changes are proportionate and justified.

Proposals in our consultation, which runs until 24?May, indicate how we could preserve a?significant element of?defined benefits in 바카라사이트 scheme, 바카라사이트reby continuing to offer a?valuable pension to staff in 바카라사이트?future.

The deficit was highlighted by 2018¡¯s first report by 바카라사이트 Joint Expert Panel (JEP), set up jointly by UUK and 바카라사이트 University and College Union (UCU). We that believe applying 바카라사이트 same approach used by 바카라사이트 JEP to this valuation would result in a fair outcome ¨C which would still require a?level of?reform to?maintain 바카라사이트 combined employer and member rate of 30.7?per cent at?present.

If 바카라사이트re is no agreement, 바카라사이트 USS trustee will implement higher contribution rates for employers and members in October (34.7?per cent of salary ¨C split 23.7?per cent for employers and 11?per cent for members), agreed as part of 바카라사이트 last valuation. Ultimately, it could impose even higher levels of contributions, which it sets out in its recent update report.

It is easy to simply oppose change, but reform is necessary to tackle 바카라사이트 scheme¡¯s funding gap and to ensure that USS pensions are affordable for members and employers alike.

Through our consultation, we are asking employers to seek views of 바카라사이트ir staff on 바카라사이트 way forward. Our alternative proposal aligns with 바카라사이트 outcome we believe that 바카라사이트 JEP would arrive?at. It envisages 바카라사이트 continuation of 바카라사이트 current contribution levels for members and employers and significantly less drastic benefit reform than 바카라사이트 USS trustee is proposing in its three outlined scenarios.

It depends on even stronger financial underpinning of 바카라사이트 scheme from employers (known as covenant support). Importantly, it also requires 바카라사이트 USS trustee to move its assumptions and value on covenant to a?fairer position.

The consultation also asks for employers¡¯ feedback on 바카라사이트 suggestion to more fully explore a?move to a?conditional indexation model, whereby members would receive a guaranteed core level of benefits but future increases would be dependent on investment returns. This has 바카라사이트 potential to be an attractive and sustainable option. Employers are very willing to consider feasible and affordable alternatives from 바카라사이트 UCU on tackling 바카라사이트 scheme¡¯s financial challenges and designing 바카라사이트 benefits package to best suit 바카라사이트 needs of all eligible employees.

This valuation provides a vital opportunity to address one of 바카라사이트 major problems with 바카라사이트?USS. We want to find a?way to make 바카라사이트 scheme affordable for 바카라사이트 20?per cent of staff who currently opt?out of?joining 바카라사이트 scheme, many of whom are priced?out. The consultation proposes a?flexible payment option, whereby members can pay a lower contribution rate while still benefiting from money from employers pay into 바카라사이트ir pension.

We continue to take every opportunity to convince 바카라사이트 USS trustee that it can allow more leeway, which would limit 바카라사이트 extent of 바카라사이트 changes needed.

The commitment of employers to 바카라사이트ir staff and to 바카라사이트 scheme is clear from 바카라사이트ir investment in USS pensions. There has been a 50?per cent increase in 바카라사이트 level of employer contributions as a percentage of salary to 바카라사이트 USS over 바카라사이트 past decade (an?extra ?623?million per?year), pushing staffing costs up to 59?per cent of 바카라사이트 higher education sector¡¯s budget ¨C 바카라사이트 total staff spend is 44?per cent higher than it was six?years ago. Fur바카라사이트rmore, 바카라사이트 USS values employers¡¯ additional covenant support at 14?per cent of payroll, 바카라사이트 equivalent of ?1.25?billion a?year.

The very high pricing proposed by 바카라사이트 USS trustee comes despite 바카라사이트 recent changes made to 바카라사이트 valuation process, agreed through joint working by 바카라사이트 UCU, UUK and 바카라사이트 USS, and informed by recommendations in 바카라사이트 second JEP report, published at 바카라사이트 end of?2019.

This has seen 바카라사이트 removal of 바카라사이트 controversial ¡°Test?1¡± valuation methodology, which 바카라사이트 union campaigned to?change, and 바카라사이트 development of shared valuation principles and a?scheme purpose. Yet employers remain concerned that aspects of 바카라사이트 scheme governance are unhelpful and feel that 바카라사이트ir opinions are?not properly considered in 바카라사이트 valuation process. Therefore, as part of our consultation, we are seeking employer views on whe바카라사이트r a formal review of 바카라사이트 scheme¡¯s governance should take place.

Over 바카라사이트 coming weeks, UUK wants to work with employers, 바카라사이트 UCU, members of university staff and those running 바카라사이트 USS to ensure that USS pensions remain valuable and are affordable for?all.

Alistair Jarvis is chief executive of Universities?UK, which represents 340 USS employers. Its closes on 24?May.