Pension Schemes: Universities

Debate between Viscount Younger of Leckie and Baroness Altmann

Thursday 7th September 2017 Lords Chamber

[Viscount Younger of Leckie]

I should just point out to my noble friend that the Government are not making statements about how much they should be paid. My honourable friend in the other place, Jo Johnson, made a speech this morning reiterating his point that universities should exercise great restraint in deciding how much to pay vice-chancellors and other staff and has set out a series of guidance. Furthermore, the Office for Students, which has been set up as part of the Act, will also be given greater powers and encouragement to set a remuneration code.

[Baroness Altmann (Con)]

My Lords, does my noble friend agree that there seems to have been quite a lot of scaremongering about this particular pension scheme? The assets of the scheme have performed well; it is well governed, has already adjusted its benefits in relation to the deficit that opened up in the 2014 valuation, and is now negotiating with universities and unions as to further adjustments that will be required. However, it is important to stress that student fees are set by the Government, and universities have sources of income that go well beyond the fees they receive from students. Much of the problem is caused by the exceptional policies that the Bank of England faces. This is an open scheme with strong cash flow and strong governance.

[Viscount Younger of Leckie]

My noble friend knows more than I do how complex managing pension schemes is. There are lots of variables and issues to consider. She is right that there was a review in 2014. In fact, there is a review of the scheme every three years and a recovery plan is in place. My noble friend is right: the recovery plan, we believe, is robust and will offer a good degree of stability for the next 30 years.

The DWP is publishing a Green Paper in February to build on the ongoing discussions on pension schemes in general. We will publish a response to the consultation in a White Paper this winter.