Retirement pots have already been slashed for University lecturers and staff over the course of the last 15 years, many instances resulting in strike action. But now it has been revealed that a whole host of further cutbacks are being considered by the UK’s Universities as the current pension regime is seen as being unsustainable.
The announcement of the intention to end the final salary scheme for good has already been made, but the proposals currently on the table look set to bring about further and extended strikes, and if they are accepted, they will send shockwaves throughout the sector.
Shocking Deficit
It is estimated that the USS currently presided over a deficit of £7 billion, a figure which sends shockwaves through the sector every time it is mentioned. It has been accepted for quite some time that huge reductions in benefits would be made, it was always more a case of waiting to see who would be in the firing line.
As it stands, those who are new to the sector will be the main victims, with a lower paying defined contribution scheme to be introduced rather than the former defined benefit schemes which existing staff currently have in place. Unfortunately, the sweeping reforms across the deficit-laden scheme (the worst in the public sector) will not end there.
The very real threat of retirement funds being held back for an extra five years is also a very real threat, as is the gradual reduction of benefits form savers across the board. Initial promises and documentation are set to be torn up and revised, and there may not be anything staff can do about it.
Add to this the restrictions about to be placed upon the entire sector meaning that as of April 2015, nobody will have the freedom to choose to transfer their savings away from the UK, and you get an idea of just how serious things are for academics, and exactly why strike action is likely to become a thing of regularity for the foreseeable future.
Assessing All the Options
For former lecturers and university employees now living abroad, there are still seven months available to assess the options. Previously, transferring funds into qualifying overseas schemes (QROPS) for this sector was seen as unwise due to the amount of benefits such as private health care and insurance products offered with the defined benefit schemes offered, however many have seen these benefits cut too. And with the reduction in the growth of funds due to the switch from the RPI to the CPI, there is seemingly very little reason to allow savings to stay in the UK for expats.
As a result, QROPS providers across the globe are reporting a large volume of enquiries from across the entire public sector, as the benefits of avoiding a deficit-laden fund, by-passing future currency fluctuations and having freedom of choice in exactly how savings are used start to look very appealing with so much uncertainty overshadowing anything the UK can currently hope to provide.
Proper advice should always be sought if a QROPS transfer is being considered. They are not necessarily the best move for every individual case, however with such a variety of funds in various jurisdictions throughout the world, they offer a modern-style financial product which can be tailored to suit the needs of the vast majority looking to escape the UK before the door shuts for good.
