Addressing Pensions Pressure: Funding Challenges and Strategic Responses
Tom Merchant, Chief Executive, discusses the significant pressures facing pension schemes, including inadequate provisions impacting 12 million individuals. Key challenges arise from low bond yields, poor economic performance, and increasing longevity, compounded by regulatory changes from the Financial Services Authority. The Advanced Risk-Responsive Operating Framework (ARROW) and ongoing dialogues within the Joint Negotiating Committee (JNC) form part of the comprehensive approach to manage funding issues. This includes a new levy calculation anticipated to increase substantially, amidst ongoing engagement with stakeholders to enhance member benefits and administration efficiency.
Addressing Pensions Pressure: Funding Challenges and Strategic Responses
E N D
Presentation Transcript
Tom Merchant Chief Executive
Pensions under pressure • 12 million have inadequate provision • Funding pressure on DB schemes • Low bond yields • Poor economic performance • Increasing longevity • Regulatory/legislative changes
Financial Services Authority • Advanced, Risk-Responsive Operating FrameWork (ARROW) • Four day process across both offices • Some follow-up points, no major issues
USS Investment Management Ltd USS USSIM tPR FSA
Pensions Regulator • Employer Covenant • Ernst & Young • Supplements information provided by the funding councils
Pension Protection Fund • New Levy calculation • Substantial increase in levy anticipated
Example of how benefits build in Career Revalued Benefits section
JNC developments • New dialogue • JNC funding and benefits working group • Continuing discussion and engagement
Actuarial valuation Valuation date 31 March 2011 March: Data gathering July: Computation October: Consultation November: USS board review December: Results released
Scheme funding (as at 31 March) 80% on TP as at 05/12/2011
Membership statistics 20% 31% 20% 27% 49% 53%
Benchmarking exercise • Competitive administration costs • £23.49 per member - £2.24 below the UK peer group average cost • High staff productivity • 17% more work than the UK peer group average • High transaction volumes performed and more information per member than the average of schemes in the peer group “A cost effective administration which delivers a high service to its members’’
USSonline • Roll-out under way • Current position • 157 institutions • 92% of USS membership
Data quality • Common data • Personal data as provided by institutions • 100% accuracy by 2012 • Conditional data Currently on track on to meet targets
Tom Merchant Chief Executive
