The University pension scheme – a way forward

Publication date: 25 Nov 2021 | External Author(s): Miles, D ; Sefton, J

The University Superannuation Scheme (USS) is trapped between a rock and a hard place. We propose a way forward.

The current problem:

The USS is in a difficult position. Given its portfolio of assets, it is more than likely that it has sufficient funds to make good on all the pension promises made to scheme members over the years. But it holds risky assets. The returns on its assets could turn out to be below expectations. There is a significant probability that it will have insufficient funds to pay these promised pensions; in a recent paper we estimate this probability to be between 20-40%. The universities would then be left with a financial hole that would need to be filled from somewhere. Though the Pension Regulator (TPR) is not transparent about precisely what is an acceptable level of risk, they have made it very clear that the current level of risk is more than is acceptable. They require that steps be taken to reduce the risk of underfunding.

Read the full policy paper here