bangor university pension & assurance scheme (bupas)
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Bangor University Pension & Assurance
Scheme (BUPAS)
Mike Davies
Director of Finance
Consultation on changes in benefits
27 February 2019
Robin Glyn
Pensions Manager
Agenda
• Current Bangor University pension provision
• Financial position – Bangor University
• Latest position – USS
• Current valuation – BUPAS
• Discussions with Trade Unions
• Proposals for changes
• Questions
Current Bangor University pension
provision
• USS – 1,000 + academic & related staff
• BUPAS – 400 + support staff
• Teachers’ Pension – small number of staff
• NEST – auto-enrolment scheme for support staff
Financial position – Bangor University
• Over last 6 year has been ‘reasonable’ at best, but not ‘sustainable’ with deficits
• Now under severe pressure due to recruitment downturn
• July 2018 projections missed by c400 students
• November 2018 review based on ‘flat’ recruitment at 2018 intake levels
• ‘Lost’ income of up to £15m pa over coming years
• All elements of cost under pressure, but growth options being pursued
Underlying Performance against 2017/18
projections for year
All figures £m
2017/18
Published
2017/18
One-offs
2017/18
Recurrent
2016/17
Recurrent
Total Income 164.9 (20.8) 144.1 142.7
Total Expenditure 145.4 (1.0) 146.4 148.1
Operating Surplus/(Deficit) 19.5 (21.8) (2.3) (5.4)
Pension/other gains 7.3 (7.0) 0.3 0.4
Reported Surplus/(Deficit) 26.8 (28.8) (2.0) (5.0)
Fee Income decline since
2016, 2017 and 2018 Plans
60,000,000
65,000,000
70,000,000
75,000,000
80,000,000
85,000,000
90,000,000
18/19 19/20 20/21 21/22
£
Academic Year
Tuition Fee Income
5YFF 2016 5YFF 2017 5YFF 2018 (July) 5YFF 2018 (Nov) Linear (5YFF 2016) Linear (5YFF 2017)
Financial Sustainability Plan –
November 2018 CouncilCost Pressure
18/19 19/20 20/21 21/22
Non-pay & Misc Income at 2017 levels (2,909) (3,229) (3,004) (2,700)
Tuition Fees reduction Sept 2018 (4,780) (9,390) (12,945) (15,275)
Halls Fees reduction Sept 2018 (1,200)
Total Cost Pressures at November 2018 (8,889) (12,619) (15,949) (17,975)
Savings Identified - Pay
Pay savings per 18-19 budgets 1,673 2,592 2,508 2,420
Academic savings post 18-19 1,600 2,500 3,000
Prof Services savings post 18-19 60 2,025 2,030 2,035
USS Cost increase of 1%
Total Pay savings identified
Savings Identified - Non-Pay
Main Arts (re-phased & HEFCW funded)
(640) (664) (669)
1,733 5,577 6,374 6,786
1,100
Estates backlog budget removed 1,000
Halls refurb deferral from 18-19 800
Non-pay per 18-19 budgets & later increases 4,322 5,122 5,750 5,750
Space savings based on reduced estates footprint
Total Non-Pay savings identified
Income Enhancement Opportunities
Diamond dividend per latest estimates
325 650 1,300
7,222 5,447 6,400 7,050
300 3,000 5,000
International Recruitment Growth plan 900 2,400 4,300
Non-pay costs of increased recruitment 0 (135) (176) (221)
Pay costs in academic delivery of growth
Net Income Growth identified
(350) (840) (1,540)
0 715 4,384 7,539
Total Improvements Identified 8,955 11,739 17,158 21,375
Excess/(Shortfall) against Cost Pressures 66 (880) 1,208 3,400
Latest position – USS
• 2017 Valuation is being signed-off on a basis that is unaffordable for
both staff and employers.
• Increased contributions will commence on 1 April 2019 but future rises
need to be avoided before 1 October 2019.
• Trustee has agreed to a 2018 Valuation to incorporate some of the JEP
proposals, but future benefits only released from age 66.
• Firm proposals on ‘contingent contributions’ still awaited, that would
trigger increases for both staff and employers in adverse
circumstances.
Current valuation - BUPAS
• 2017 Valuation showed that deficit had reduced from 2014 level of
£13.8m down to £3.2m.
• However, ongoing cost of future benefits had risen from 27.6% to 33%
• University finances cannot support an increase from 18.35% to 23.7%
in employers contributions
• Hence proposal to review future benefits only – no impact on any
existing accrued benefits earned to date.
Increases in employer contribution rates
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
01/04/1978 01/04/1982 01/08/1989 01/01/1992 01/05/1997 01/08/2003 01/08/2006 01/06/2010 01/08/2010 01/05/2016 01/08/2018
Member and Bangor University pension contributions - BUPAS
Member contribution Bangor University Contribution
Discussions with Trade Unions
• Working Group set up in July 2018 to meet monthly to develop
proposals ahead of any consultation process.
• Numerous options considered and discussed over Summer/Autumn.
• Proposal for an Interim Valuation made in November 2018.
• Unions wrote to Trustee (not employer), but Trustee Board felt unable
to consider this route given extensive previous advice from Actuary etc
• University made proposal in January over changes now being
consulted upon.
Proposals for change
Letter to all current and prospective members sent out 25 January 2019:-
• Consultation started 4 February 2019 and runs for >60 days
• Consultation closes on 5 April 2019
• Explains proposed changes (later slides) and some of the
alternatives considered
• Two open meetings arranged. Illustrative examples circulated.
• Feedback welcomed asap. FAQ will be available on intranet or
questions to Robin Glyn.
• Alternative ideas welcomed, all responses will be considered.
Proposals for changes
1. Capping pre-retirement revaluation at 2.5%
• All pension accrued to date is increased by inflation each year
• Proposal to cap inflation linkage at 2.5%
• If inflation is less than 2.5%, cap will not bite
• If inflation is higher than 2.5%, previous years’ pension will only
increase by 2.5%
• The higher inflation goes above the cap, the greater the effect of
this cap will be
Proposals for changes
2. Changing Normal Retirement Age (NRA) from 65 to 66
• This change brings BUPAS in line with State Pension and many
other Schemes (USS, TP, LGPS)
• All benefits earned after implementation date would be payable at
age 66 without reduction
• It can be accessed before age 66, but a reduction factor would be
applied to benefits earned after implementation date
• Currently 5.7% reduction factor per year early on pension, and
2.5% reduction factor per year early on tax-free lump sum
Proposals for changes
3. Changing accrual rate from 1/80ths to 1/85ths
• Each year, your salary is divided by the accrual rate to calculate how
much pension benefit you’ve earned e.g.
• £28,000 / 80 = £350
• Changing the accrual rate to 1/85ths would mean you earn less pension
benefit for each year of membership after implementation e.g.
• £28,000 / 85 = £329
• This also affects your tax-free lump sum
Any questions?
Useful contact details
Mike Davies, Director of FinancePhone: 3199
E-mail: mike.davies@bangor.ac.uk
Robin Glyn, Pensions ManagerPhone: 3261
E-mail: r.glyn@bangor.ac.uk
Consultation inbox
BUPASConsultation2019@bangor.ac.uk
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