Pension Schemes: Universities

Baroness Falkner of Margravine Excerpts

Thursday 7th September 2017 Lords Chamber

Asked by

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government what assessment they have made of the affordability and sustainability of United Kingdom university pension schemes.

[Viscount Younger of Leckie (Con)]

My Lords, universities are subject to regular assessment of their financial sustainability, management and governance. Government set the legislative framework for pension schemes to operate within. It is for the trustee and employer to agree appropriate plans to ensure schemes are adequately funded. This is overseen by the independent Pensions Regulator. Where the Pensions Regulator believes that a scheme’s position warrants its involvement, it considers intervention options, from education through enablement to enforcement.

[Baroness Falkner of Margravine (LD)]

I need to declare a few interests. I am visiting professor at King’s College London, I am married to an academic who pays into the scheme and I am the parent of a child who is paying university tuition fees: these may well be used to bail out the scheme, so I submit to the House that I may be relatively neutral in this regard.

I accept that the valuations of the scheme are a matter for the Pensions Regulator, and its discussions with Universities UK will be interesting, but the size of the deficit of the United Kingdom’s largest private pension scheme must be of some interest to the Government. I remind the Minister that, rightly, the Government bailed out the banks. It would appear odd, when the public purse pays £105 billion into universities, that they should say that this is a hands-off matter. We know that there are only three ways to plug the gap: to make students pay for it through higher fees; to cut research and teaching budgets; or for the universities themselves to plug the gap, perhaps through cutting senior salaries and remuneration. Which approach do the Government favour?

[Viscount Younger of Leckie]

The House may not be surprised to hear me say that it does not need reminding about the passage of the Higher Education Act, when there was a strong focus on universities being autonomous institutions responsible for their own finances. While the Government cannot intervene in a higher education institution’s finances, we do set and will continue to set the maximum fee cap.

On pension schemes, the independent Pensions Regulator has powers to protect member benefits under circumstances set out in legislation, and that remains.