On the go: A think tank has suggested that members of the Universities Superannuation Scheme should be able to choose to transfer out part of their pension benefits to a self-invested personal pension scheme.
A report by the National Institute of Economic and Social Research, published on Thursday, argued that allowing members a partial transfer into a Sipp would find a way forward in the USS pensions dilemma, and would not “create any losers” in the process.
The think tank said that the chance to partially transfer into a Sipp would offer members a better risk-adjusted return on their pension contributions, and potentially more flexibility in retirement options, while simultaneously strengthening the covenant of the USS due to a reduction in the size of pension liabilities.
The NIESR said it would be up to members to decide whether they would like to partially transfer, though it estimated that a “significant” number of individuals would be keen to take advantage of any such change.
The think tank recently estimated that there is a 20 to 40 per cent chance that the USS would be able to pay its pension promises, and that underfunding is the main issue facing the scheme.
Pensions Expert previously reported that the scheme’s latest valuation saw the deficit quadrupling to more than £14bn, necessitating a rise in contributions to between 30.7 per cent and 42.1 per cent of payroll under the most favourable scenarios.
The rates could be increased to as much as 56.2 per cent of payroll unless employers agree to a series of conditions.
The NIESR said universities are already near the limit on what they can afford to contribute. As a result, the Joint Negotiating Committee recently proposed only marginally raising contributions, which in turn meant that current members would be paying slightly increased contributions. This led to calls for strike action.
Staff from 58 universities will strike from December 1 to December 3, after 76 per cent of University and College Union members who voted on the pension ballot backed strike action.
The union has previously warned that the three-day strike action will be “the start of sustained disruption for the sector if employers fail to negotiate”.
