You are here: Home - Retirement - Retirement planning - News -

Pension expert slams tuition fee rise to fund university pension shortfall idea

0
Written by:
01/08/2017
A leading pension expert has condemned the suggestion that tuition fees should rise to plug the Universities Superannuation Scheme pension deficit, saying it poses a ‘huge threat to intergenerational fairness’.

Steven Cameron, pensions director at Aegon said increasing tuition fees to fund the gap would be ‘robbing grandson Peter to pay grandpa Paul’. At £9bn, the Universities Superannuation Scheme (USS) now has the largest pension deficit of any UK pension fund.

The USS funds pensions for academics and has more than 390,000 members. Poor investment management has been blamed for the weakness of the fund.

Cameron said: “Gold-plated defined benefit schemes are rarely open to those joining today’s private sector workforce, but the funding shortfalls of many existing schemes are having wide reaching implications which can pass down through the generations. Employees are now much more likely to be offered membership of a defined contribution scheme, but employers struggling to shrink defined benefit scheme deficits will be less inclined to offer more generous contributions above the automatic-enrolment minimum to new employees.”

He added the suggestion that universities may need to increase the tuition fees for today’s students to fund the huge pension shortfall “takes intergenerational unfairness to a new level”. It would give future generations high debt to make good on pension promises offered to previous generations.

He said: “Some joining the workforce with significant student debt, facing high interest rates, may be tempted to save on their pension contributions by opting out of their employer’s pension scheme. But this only perpetuates the problem as not only do they lose out on valuable employer contributions, it is contributions paid while younger that have longest to grow to fund more in retirement.”

There are 1 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week