Thread by @MikeOtsuka

🚨🚨🚨The SAUL pension scheme announces that it is in SURPLUS -- 109% funded -- as at 31 April 2021. It was, however, in deficit -- 94% funded -- as at 31 March 2020 triennial valuation date. (@JosephineCumbo) 1/
saul.org.uk/#/page/sauls-h…

It appears that SAUL's actuary has certified the Schedule of Contributions at 30 April 2021 date of signing rather than 31 March 2020 valuation date. Hence the schedule assumes a surplus & therefore no deficit recovery contributions. 2/

While past pensions promises are more than fully funded, the cost of making pension promises in future years is now estimated to cost 35% if benefits and investment strategy remains the same. This is 13% above the current 22% contribution rate (6% member, 16% employer). 3/

In setting an excellent example for @USSEmployers more generally, the London & nearby employers of USS who also sponsor SAUL have come to the following agreement with the unions to address the high cost of future service: 4/

NO DETRIMENT TO CURRENT MEMBERS!
✅No rise in their contributions. They will remain at 6%.
✅No cuts to DB pensions. Their benefits will remain almost as good as the benefits @USSpensions currently offers👇. 5/
mikeotsuka.medium.com/why-cant-uss-p…

Employers, however, will reach into their pockets and increase their contributions from 16% to 21%.
"This extra money from employers shows their commitment to provide you with a valuable pension now and in the future." 6/

But 21% employer + 6% member = 27%, which falls 8% short of the required 35% to retain the status quo. To address this gap, SAUL will do two things: 7/

"The Trustee will make some changes to SAUL’s funding and investment strategy." I understand that this involves a shift of the portfolio towards growth assets. See here for more on SAUL's current approach to investment. 8/
mikeotsuka.medium.com/saul-combined-…

Most controversially, employers have also come to an agreement with unions that new members will be enrolled in a DC scheme for their first 3 years before shifting over to SAUL's DB scheme. The rationale is presented here👇. 9/

The difference between SAUL's surplus & USS's deficit mainly comes down to the fact that SAUL has managed their assets & liabilities much better than @USSpensions has during the past several years. See linked threads & blog posts👇. 10/

https://twitter.com/MikeOtsuka/status/1205034921309421570

I still haven't received an answer to this question I submitted to @USSpensions👇 re USS v SAUL. @Barker4Kate would you please have a word with your executives that they owe their members an answer to this question? 11/11

https://twitter.com/MikeOtsuka/status/1391711793890750466