UK. The solution to university pensions? Better fund managers
Never have university pensions been so firmly in the media spotlight as this week. But why are the changes to the universities superannuation scheme (USS) so controversial? Views diverge wildly: vice-chancellors and their representatives say future pensions are unsustainable, while staff see a strongly performing scheme. With an estimated cost of £200,000 to the average member of staff over their retirement at stake, something had to give.
Pensions are complex. To try to understand them, we need to go back to basics. Defined benefit pensions involve employees agreeing a monthly contribution with their employer. The employer matches it at an agreed rate, with the pension at retirement guaranteed – or defined. Both contributions are folded into the pension fund, with some covering the costs of current pensioners and the rest invested to secure returns, keeping track with rising prices. In theory, the fund’s boat should be lifted with rising economic tides.
Read More: The Guardian
