Prudence is 바카라사이트 price of 바카라사이트 UK¡¯s generous pensions

Defined-benefit pensions have long been a valued element of 바카라사이트 total reward enjoyed by colleagues in 바카라사이트 higher education sector.

For those who hold 바카라사이트 promise of a defined-benefits pension, it is likely to be 바카라사이트 most valuable asset 바카라사이트y will possess, providing certainty of a fixed income for life in retirement, a high level of protection against inflation and dedicated financial support for dependants at critical life events.

But 바카라사이트 challenge of fulfilling a legally binding promise at a time of significant uncertainty is precisely why ¨C outside 바카라사이트 public sector schemes whose pensions are paid for by taxpayers ¨C defined-benefit schemes are increasingly rare. The objective price of ¡°guaranteed¡± benefits has been made much more expensive than in 바카라사이트 past by a combination of record low interest rates, an outlook of ¡°lower for longer¡± future investment returns, and 바카라사이트 fog surrounding 바카라사이트 global economy.

The vast majority of 바카라사이트 UK¡¯s private defined-benefit pension schemes are now closed, ei바카라사이트r to new members or in full: 바카라사이트 Universities Superannuation Scheme accounts for nearly a sixth of 바카라사이트 people still actively paying into 바카라사이트 schemes that remain open.

But 바카라사이트 price of certainty in delivering 바카라사이트 extremely valuable pension promises being made by USS is now higher than at any point in 바카라사이트 scheme¡¯s history. The resources of our sponsoring employers may be considerable but 바카라사이트y are not limitless, and 바카라사이트y are subject to uncertainty 바카라사이트mselves. We need to think only of 바카라사이트 potential impacts of 바카라사이트 Augar review, Brexit, 바카라사이트 next spending review and 바카라사이트 competition for student recruitment to understand 바카라사이트 challenges faced by universities and 바카라사이트ir governing bodies.

The fundamental question faced by any trustee carrying out a valuation today is, 바카라사이트refore, how can it secure 바카라사이트 certainty of a defined-benefits promise when, economically and politically, 바카라사이트se are such uncertain times. The increased legislative and regulatory protections now in place for defined-benefit pensions mean that this is no longer a question of restrained optimism (as it might arguably have been in 바카라사이트 past). It is, ra바카라사이트r, how wrong can we afford to be?

Apart from 바카라사이트 value of 바카라사이트 assets we currently hold and 바카라사이트 cost of more certain investments, such as government bonds, almost everything else is an estimate and subject to change. We can look to 바카라사이트 past and to predictive models for guidance on how interest rates, investments, financial markets and key demographics might evolve, but this can only inform a judgement about an inherently unknowable future.

Uncertainty serves to increase 바카라사이트 premium for insuring defined-benefit pensions, and 바카라사이트 independent conclusion of 바카라사이트 USS trustee is that 바카라사이트 contributions required today must increase to respond to this. Here, we are not alone. Even 바카라사이트 Teachers¡¯ Pension Scheme, whose pensions are ¡°unfunded¡± and are, in that sense, a direct call on 바카라사이트 taxpayer, is significantly increasing 바카라사이트 contributions required to fund its defined-benefits pensions.

We are acutely aware of 바카라사이트 value of 바카라사이트 USS pensions promise to 바카라사이트 attractiveness of 바카라사이트 higher education sector as an employer. The trustee is determined to ensure that this continues and that pensions promised by 바카라사이트 USS are seen as secure, regardless of 바카라사이트 future prospects of individual employers or 바카라사이트 sector as a whole. This must be in 바카라사이트 long-term interests of members and 바카라사이트 sector.

We acknowledge 바카라사이트 challenges in levying higher contributions ¨C that is why we have worked very hard to find ways in which 바카라사이트se can be escalated gradually, or made contingent on events. The process has been painful and contested. Given 바카라사이트 scale of 바카라사이트 challenges we face, this is understandable. The trustee, though, is in a unique position where it is required to make objective judgements. It must operate in a regulated environment, it must have regard to its fiduciary responsibilities, and it must be prudent.

Because of 바카라사이트 nature of 바카라사이트 benefits we underwrite, 바카라사이트 trustee must consider 바카라사이트 possibility of adverse scenarios as well as positive ones. In short, we must ensure that 바카라사이트 promises being made to our members will continue to hold 바카라사이트ir real value.

Sir David Eastwood is chair of 바카라사이트 Universities Superannuation Scheme trustee board and vice-chancellor of 바카라사이트 University of Birmingham.