Pension Schemes: Universities

Lord Watson of Invergowrie Excerpts

Thursday 7th September 2017 Lords Chamber

[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.

[Lord Watson of Invergowrie (Lab)]

My Lords, the Question in the name of the noble Baroness, Lady Falkner, mentioned university schemes, although for the reasons she outlined to us, she only referred to the Universities Superannuation Scheme. In fact, there is a two-tier system in pensions provision for academic staff in universities. An academic retiring after 30 years at Oxford University will have a pension pot with the USS scheme worth around £150,000 less than an academic retiring at the same time from Oxford Brookes University in the Teachers’ Pension Scheme. While the Teachers’ Pension Scheme is in good financial health, despite the comments from the noble Baroness, Lady Altmann, the Universities Superannuation Scheme is certainly not. The Universities and Colleges Union has real concerns about the manner in which the scheme’s executives carry out valuations and make investment decisions.

Will the Minister ask the Department for Education to challenge university finance directors over the manner in which the scheme is being run—leaving aside the role of the Pensions Regulator—when academic staff, their representatives and others have made suggestions for a change in direction for the scheme which have so far been ignored?

[Viscount Younger of Leckie]

I do not agree with the noble Lord’s assessment of the scheme. It has a deficit, but so have many pension schemes. He will know more than I do about how that operates. It is being closely monitored and Universities UK, which oversees the scheme as a representative of employers, has launched a consultation this month which will run until 29 September on the proposed assumptions for the scheme’s technical provisions. A lot is going on to be sure that we monitor the scheme’s progress. Without getting too technical, interest rates, as the House may know, have played a part. These can change, and suddenly the parameters can change.