Employers want to retain final-salary pensions

October 30, 2008

Most universities would prefer to see the retirement age raised to 67 or above if it means that academics continue to receive pensions linked to their final salaries, according to a survey.

After putting questions to 93 higher education institutions, the Employers' Pension Forum found that 95 per cent agreed that final-salary pension schemes were the most appropriate to the sector and should be preserved.

Final-salary pension schemes have been widely abandoned in the private sector for being too expensive.

Most universities would support increasing both staff and employer payments into pension funds and also raising the pension age to 67 or above if these measures were necessary to maintain final-salary pensions.

Two thirds agreed that a pension linked to "career average" earnings might be suitable as a fallback if "cost challenges" meant final-salary provision was not possible.

Some institutions suggested that career-average schemes should be considered for senior managers, including vice-chancellors, who moved into highly paid roles only towards the end of their careers.

But 30 per cent said these were inappropriate for higher education because they could potentially have a negative impact on recruitment and retention.

• At the University of Sussex, members of Unite union have taken two days of strike action over plans to abolish final-salary pensions for new support staff on grade 6 or below.

In a bid to reduce a £23 million deficit in the university's Pension and Assurance Scheme, the university wants to introduce a defined-contribution scheme for new members and reduce benefits for existing ones.

A Sussex spokesperson said: "Leaving the scheme un- changed and open for future staff would lead to projected liabilities of nearly £500 million by 2030, according to independent actuarial advice.

"This presents a significant exposure to financial risk. It would be irresponsible not to take action now to ensure that pension provision is affordable and sustainable."


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