University pension fund faces deficit of £10.5bn
28/10/2013
The Universities Superannuation Scheme (USS) is the biggest pension fund in the country, and was originally reported to be facing a deficit of £7.9bn, however, reports are suggesting that this deficit could actually be larger than originally reported.
Analysis from pensions consultant John Ralfe has suggested that the shortfall could in fact be closer to £10.5bn, raising some concerns about the fund itself. Furthermore, Ralfe has raised concerns that in order to recover the deficit, universities may have pass the cost of staff pensions on to students by increasing fees even further. Which is a particular concern when considering that university fees have risen considerably in recent years whilst at the same time students were also recently found to be facing a cost of living crisis.
It has been further reported that in order to reduce the deficit over a 20 year period universities would almost need to double their own contributions, equating to a potential hike of around £1,000 a year in tuition fees.
However, David Willets, the Higher Education Minister claimed it would be unfair to expect students to foot the bill of the pension deficit. He further went on to say "Universities are independent autonomous bodies and they know one of their financial responsibilities is to stand behind their pensions and tackle their deficits."
Nicola Dandridge, chief executive of the umbrella body Universities UK, denied any suggestions that tuition fees would be increased to cover the deficit by stating "Employers have already taken significant steps to address the fund deficit and will continue to work on long term solutions to ensure that USS remains sustainable and affordable." Daindridge further stated that "There is no suggestion that tuition fees will be increased to plug the USS funding shortfalls. This will not feature in any of the considered options to deal with this deficit."
In response to these reports the USS has claimed that the outlook for the fund remains positive by stating "USS is a long term investor, and unlike many defined benefit schemes it remains open to new members and is cash positive. Assets are performing well, in the year to March 2013 the investment team outperformed independently set, industry wide benchmarks."
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