Following on Dr Geoffrey Copland's statement that universities are heading for a financial crisis over the payment to staff of final salary pensions, Gerry Devenney, Principal at consulting actuaries Punter Southall said:
"Even the public sector is not immune from the pension equivalent of global warming where issues such as the demographic heat wave have already melted away virtually all DB pension provision in the private sector.
Being on the fringe of the public sector, the tertiary education sector is quickly having to come to terms with the rapidly rising water level. Just as with real climate change, further inertia and denial will quickly exacerbate the problem so some major and difficult decisions are now required. As DB provision seems sacrosanct in the public sector, universities would do well to consider moving away from traditional final salary promises and adopting more innovative, risk-sharing approaches such as cash balance schemes which maintain the DB nature of the pension promise."
Ends
For further information, please contact:
Penrose Financial
Clare Murphy-McGreevey
0207 786 4834
Trustee training - Pension scheme investment (September 2010)
