Aberystwyth University Pension Assurance Scheme
25 June 2014
At the meeting of its Council, on Friday 20 June, the University considered the future of its in-house pension scheme, Aberystwyth University Pension Assurance Scheme (AUPAS).
This followed the Council meeting on 29th April 2013 where the Council approved proposals to hold a consultation on closing AUPAS for future accrual and for new members and introduce a replacement Defined Contribution (DC) scheme.
The proposals approved by Council followed a review into the affordability and sustainability of AUPAS which identified that the AUPAS exposed the University to significant volatility with the deficit raising from £16.6m as at 1st March 2011 to £23.7m at 31 March 2013 before reducing to £12.8 m at 31 March 2014, and concerns that payments to members were likely to increase at a faster rate than the increase in the value of the scheme’s assets.
The consultation period closed on 9 June 2014 and took account of the views of the staff affected, their Trade Union representatives, the pension scheme’s significant deficit and the future sustainability of the scheme.
During its meeting on 20 June, the University Council considered at length the feedback received throughout the consultation. Following considerable discussion, the Council agreed the following:
• The closure of the Direct Benefit scheme by 31 March 2015 for future service accrual and new members
• The introduction of a period of discussion with the trade unions to talk about:
o The involvement of the trade unions in the procurement of a new DC scheme;
o The extension of the enhanced VS scheme for a further 2 years for staff in AUPAS. Staff would need to apply by 19 December 2014 with the option to leave by 31 December 2016.
The University Council has delegated the approval of the procurement process to its Finance & Strategy Committee.
In closing the scheme, the University has committed to the following:
• All the benefits members have earned in AUPAS to the date of closure will be protected and individuals will become deferred AUPAS members, and no further AUPAS benefits will be accrued. The deferred pension benefits from AUPAS for these individuals will be based on their final salary at the date at which they leave the University, for example when an individual retires.
• Maintaining the same level of benefits relating to ill-health and death-in-service as is currently offered in AUPAS.
• As a result of the consultation, the University agreed to increase the employer’s contribution to 10%.
• Employees can make whatever contribution they wish into the proposed new scheme, from 0% to the maximum permitted HMRC limit of £40K per annum, and still receive the 10% contribution from the University.
The decision was presented to representatives of the Trades Unions on Monday 23 June.
The University looks forward to working with members of the Trades Unions on the procurement process of the replacement Direct Contribution pension scheme.