BRITAIN’S second-largest private retirement scheme – which pays pensions to university staff ??– could be forced to cut benefits and shift away from equities as it tackles a huge deficit.
Next week, a University Superannuation Scheme (USS) committee will try to decide between two proposals to address a deficit which stood at £17bn as of March.
The 7 July vote highlights the dilemma faced by pension schemes worldwide wrestling with rising longevity in the midst of volatile markets and a fragile recovery, which has dented scheme sponsors’ ability to meet the growing costs involved.
The £30bn USS scheme, second in size only to the BT Pension Scheme, faces a choice between two plans.
One, from the universities, would hike the age when payments start by five years and increase contributions from members by 18 per cent, while those from employers remained the same.
The basis for payments to new entrants would change to an average career salary from the final salary arrangement used at present.
The second proposal, from the University and College Union (UCU), would keep the final salary arrangement intact and only increase the pension age to 65 for new entrants, while placing the bulk of the burden for extra contributions on the universities themselves.
In a UCU ballot earlier this month, 96 per cent of members voted to reject the employers’ proposals.
UCU general secretary Sally Hunt has said the employers “seem determined to create a two-tier system which would damage recruitment and retention of university staff”.
City A.M. Reporter