The funding levels at university pension schemes, as measured by the FRS17 standard, has improved according to a survey of university self administered trusts (SATs) by Barnett Waddingham. It found that the average FRS17 funding level rose from 77% to 82% over the 12 months to 31 July 2013, due to strong asset performance and deficit contributions paid by the universities.
Other findings include the fact that SAT pension deficits represent 8% of net assets of the university on average, down from 10% in 2012. Contributions to SATs, which cover only non-academic employees, represent an average of 3.2% of total staff costs. Most universities in the survey used the Consumer Price Index (CPI) inflation measure for at least some of the increases applied to benefits. In addition, the average life expectancy assumption rose from 20 to 24 years for a 65 year old male. The average equity weighting is 62%, largely unchanged from the 2012 average of 61%. Barnett Waddingham partner, Nick Griggs, said: “Our research indicated that almost 90% of SATs are still open to future accrual in some form. With the abolition of defined benefit contracting-out in 2016, the implications on the costs associated with running these schemes will need to be fully understood and mitigating action carried out sooner rather than later.”