Universities' pensions black hole grows to over £380m

UNIVERSITIES in the region which face massive cuts in future funding have seen a black hole in their pension funds grow to more than £380m during the recession.

The financial crisis and an ageing population has meant that pension deficits in Yorkshire universities' schemes for non-academic staff have widened, often to tens of millions of pounds.

Last night campaigners said taxpayers would be left to pick up the bill as public-sector final salary schemes placed a greater strain on the already-gaping hole in Britain's public finances.

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The universities have seen the value of their assets plunge as the recession dragged down share prices while liabilities have risen as former staff live longer. Actuaries are also forcing fund trustees to make tougher estimates of how much needs to be paid out in future.

The pension funds, which cover clerical, technical and support staff, are 387.29m in the red according to the most recent figures.

The picture is hardly less bleak at the national pension scheme for academic staff, with the Universities Superannuation Scheme (USS) showing a 4.7bn deficit according to the latest figures, although each Yorkshire institution's share of the fund cannot be measured.

The head of a body set up to assess the future of the USS has said final salary pensions could be replaced to cope with "formidable funding challenges".

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Sir Andrew Cubie is in charge of a Joint Review Group of the USS which is expected to make recommendations on the future next month.

Liberal Democrat work and pensions spokesman Steve Webb said the pension deficits were "a warning" and that workers would have to see the schemes reformed in future.

Leeds Metropolitan University, which has seen both its vice-chancellor and governors' chairman suddenly resign over the past 18 months, has the largest pensions black hole in the region.

Its share of the local government pension scheme (LGPS) rose by more than a third, with the deficit up from 56.8m to 77.2m, according to the most recent figures from last July. University accounts go on to say that "radical reform" is inevitable if the fund is ever to be balanced.

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Sheffield University saw its pension fund black hole widen by nearly 50 per cent, up 22.6m to 73.9m.

The pension pot at the University of Leeds, where lecturers were hours from a strike over job cuts earlier this month, dived into the red in the 12 months to July last year. Now the fund for non-academic staff, which had enjoyed a 4m surplus, has a 31m deficit.

Matthew Elliott, chief executive of the TaxPayers' Alliance, said: "These are vast deficits that place a severe burden on already stretched university budgets and on taxpayers. These final salary schemes were abandoned in the private sector because they are utterly unaffordable, and it is long overdue for them to be phased out in the public sector."

Last week the Yorkshire Post revealed last week that seven of the region's universities will see their teaching budgets fall in the next academic year. The higher education sector is braced for an overall cut in Government funding of up to 1bn.

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Across the public sector there is huge pressure on staff pension schemes, which has increased since the onset of the financial crisis. Last year the Yorkshire Post uncovered a pension fund black hole of more than 4.5bn at the region's local authorities.

The universities insist their valuations are just a snapshot of future liabilities managed over several decades and that a rise in the value of their assets could eliminate much of the shortfall.

CASH DEFICIT ON CAMPUSES

Bradford: 32.69m

Huddersfield: 34.35m

Hull: 29.4m

Leeds: 31m

Leeds Met: 77.2m

Leeds Trinity University College: 9.46m

Sheffield: 73.9m

Sheffield Hallam: 61m

York: 25.3m.

York St John: 12.99m

(According to most recently published figures for non-academic staff pension funds)