Under new proposals, UK Universities and their staff are facing an annual increase in pension costs to fill an estimated £18bn deficit. Rising from £3bn to £18bn in two years.
Reported in the Financial Times: The Universities Superannuation Scheme (USS), worth £67bn, will today lay out a range of options to reduce the rising deficit, which was £3.6bn in 2018.
This could mean the bill for universities, which is already under strain by the coronavirus crisis, could almost double from the current £1.7bn per year – which will mean a typical lecturer may be forced to pay thousands more for the same benefits.
According to the USS, if employers agree to the measures they have advised (including agreeing to support the scheme for 30 years) then the increases in contributions can be brought down to about 40% of salary, reducing the deficit to £9.8bn compared to £17.9bn if no support is agreed.
Universities are already under strain after studies found that a third of international students will no longer take up their offers abroad, including the UK due to the coronavirus pandemic.
Loughborough University is no exception to the financial issues facing the sector, with its 2018-19 financial report stating that the “outlook for the sector remains challenging”, and reported a budget deficit for the 2018 to 2019 financial year, although the University does have upwards of £262mil in reserve.
Loughborough University has been reached out to for a comment.
A spokesperson for the UCU said it had “no confidence” in the assumptions used by the USS to calculate the cost of pension promises. “UCU members are well-informed and expect to see better evidence behind the judgements USS has made”.
USS said it was “committed to working with our stakeholders, UUK (Universities UK) and UCU, as they consider how to respond to these challenges”.