The sector also faces a series of concurrent pensions-related challenges and the potential for complicated discussions with staff and a reduction in morale.
The main challenges are those arising from the redesign of the nationwide and public sector schemes in use at many institutions such as the Universities Superannuation Scheme (USS) and Local Government Pension Scheme (LGPS).
This leads to the need to train administration staff in the new scheme requirements, amend systems and set up new routines as well as generally increased administration requirements.
Auto-enrolment legislation and requirements to re-enrol employees will have a similar impact on systems and staff, particularly given the quite tricky requirements relating to when the different categories of employees have to be automatically enrolled, or re-enrolled after opting-out.
Overarching these are the issues of affordability of pensions themselves and increasing employer costs. For universities who are operating their own schemes, the pressure to control costs is just as relevant as in the larger public sector schemes.
We work with our clients to ensure that they understand the risks (and opportunities) that pensions pose to their future financial sustainability and their ability to deliver on their strategic plans.
The key financial risk for institutions will be that associated with any defined benefit (DB) schemes. DB schemes are very complex. It is not always intuitive how a DB scheme will react in particular financial circumstances, or given a particular change in strategy, and we find our interactive modelling tool Illuminate to be key to ensuring understanding of a given strategy.
Illuminate allows you to model the impact of changing the structure of the scheme such as changing the investment strategy or undertaking ‘liability management exercises’ (such as enhanced transfer values, pension increase exchanges, or annuity purchase); to see how the risk profile is affected, and what the impact is on the contribution rate.
We find this to be an excellent way to ensure understanding of the drivers of change. This is particularly relevant for any SATs where you have more ability to influence/set strategy, but can also help explain the risks around any wider DB schemes that you participate in (eg USS, TPS or LGPS).
Most private sector pensions accrual in the UK is now on a DC basis. When legislators think about DB, it is only to worry about protecting past service benefits; never to wonder about whether the framework for future benefits is fit for purpose.
On Friday 17 November, Universities UK (UUK) said that they want all staff in the Universities Superannuation Scheme (USS) to earn only defined contribution (DC) benefits going forward. Paul Hamilton shares his expertise on the matter.
We joined forces with students from the University of Liverpool’s Institute of Financial and Actuarial Mathematics (IFAM) to undertake a research project to understand the way in which the key risks facing the University can be quantified and modelled.
We are pleased to present the results of our eighth survey of the assumptions adopted by UK universities for determining the value of their pension liabilities for accounting purposes.
High earners could find themselves footing large tax bills as a result of reduced pensions annual allowance (AA) and llfetime allowance (LTA).
With ongoing discussions in relation to the USS very much in mind, we're thinking about the challenges faced by those who want to provide DB benefits for the future, and the ways in which multi-employer schemes can affect different employers differently.
Join Partner and Head of Higher Education; Paul Hamilton as he looks at the recent actuarial valuation of the Teachers’ Pension Scheme (TPS), in particular the impact on independent schools and universities.
Are you wondering how to educate and inform your senior staff about the changes to the USS benefits planned in October? Two of our leading experts, Paul Hamilton and Julia Turney are hosting a webinar to help offer some clarity on the changes and complexity that Investment Builder (the new defined contribution section) will bring when it’s launched in October 2016.
This is our eighth annual survey of the assumptions adopted by UK universities for determining the value of their pension liabilities for accounting purposes.
This is our seventh annual survey of the assumptions adopted by UK universities for determining the value of their pension liabilities for accounting purposes.
This is our sixth annual survey of the assumptions adopted by UK universities for determining the value of their pension liabilities for accounting purposes.
We were asked to advise a leading University in relation to its senior staff. Particular issues arose with one senior staff member with long service and he had exceeded the Annual Allowance (AA) (£50,000) in each of the last 3 tax years.