Thread by @etymologic

Bangor University's response to the UUK survey is out now, thanks to @noremacnosila's FoI request. Bangor was in the 42% to reject investment risk.

Join me on a rambling thread 👇 with more on Uni finance, consultants, and the British Universities Finance Directors Group (BUFDG)

Bangor's Survey-Monkey response to UUK is here: whatdotheyknow.com/request/465548…

@VianBikir was first on the case ...

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Some key points:

1) Bangor admits to being financially stretched -
"we can't just increase contributions without major challenges"
"the USS scheme that may prejudice the future viability or existence of the Institution"

2) Bangor is worried about its "capacity to underwrite further risk", and wants to move to DC "based on the analysis provided" by UUK & USS.

3) Bangor criticizes the USS Trustees: "we continue to be astounded at the lack of any hedging of liability risk undertaken by the USS Trustees over the past decade".

A quick look at Bangor's accounts shows that it is *not* so risk-adverse when borrowing for new buildings: bangor.ac.uk/finance/bu/aa/…

The University increased its UNSECURED loans to 42.1 million in 2017, up from 24.6m in 2016. That's a 58% increase.

The University recently invested £50m in the Pontio centre, with "a theatre, a cinema, innovation space", etc. It sounds lovely. But should the University be prioritising new buildings? Sounds a bit risky ...

The University has two large loans (£24.6m & £19.5m) from the European Investment Bank.

With Brexit looming, this source of finance may dry up ...

Universities are increasingly turning to the bond market (e.g. Oxford has borrowed $1 billion).

Bond financing terms are affected by USS pension liabilities which appear on balance sheets (FRS102) uk.reuters.com/article/uk-bri…

Bangor's survey response was returned by the Finance Director, Mike Davies. A quick google shows up some interesting connections.

1) Mr Davies has "played major roles on a number of corporate disposal projects and restructuring group pension funds."

2) Here is Mr Davies at a pensions workshop at the 2013 British Universities Finance Directors Group (BUFDG) conference in St Andrews, along with representatives from USS, Mercer, UCL - and Louise Richardson, now Oxford's VC.

3) In Jan 2017, Mr Davies recommended downgrades to Bangor's in-house pension scheme, BUPAS.

He explicitly linked downgrades in BUPAS to downgrades in USS: "In order to maintain parity of treatment of staff ... a similar package of changes was proposed for our local scheme"

Here is a link to that article: pensions-expert.com/DB-Derisking/C…

BUPAS appears to be well-funded 👇. The downgrade is justified by appealing to parity with USS! Proving that "an injury to one [pension scheme] is an injury to all".

The downgrades to the BUPAS scheme seem weirdly familiar:

End of Final Salary.
7.85% -> 9.25% member contributions
1/80th accruals
2.5% inflation cap.
pensions-expert.com/DB-Derisking/C…

Here is a letter from 7th July from Mr Davies: bangor.ac.uk/finance/pensio…
The 2.5% inflation cap on revaluations is the legal minimum, I believe. (Corrections welcome).

A downgrade too for surviving spouses whose partner dies in service. (USS have shied away from changes to death-in-service benefits).

Let's turn attention back to the British Universities Finance Director Group (BUFDG).

In 2017 their annual conference was in Bath: bufdg.ac.uk/events/confere…

Mercer were a Gold sponsor, along with various finance firms. Recall that Mercer are the pensions consultants used by USS.

Here was the agenda at BUFDG 2017 for Sunday: Golf, Roman Baths, Pre-dinner drinks, Dinner and Bar.

Here is how the meeting kicked off:
Phil McNaull, Edinburgh (cf. local pension scheme downgrades).
Dame Glynis Breakwell - wearily familiar by now.
"Resistance Is Futile".
Refreshments from Natwest (i.e. from tax-payer owned RBS).

Here is the evening session: drinks, dinner, late bar.

Sponsored by Uliving (student accommodation providers): uliving.co.uk

The next day, the AGM lasted for just half an hour!

That left time for history, comedy, refreshments, the Undercover Economist, and a nice packed lunch for the train journey home (first class?)

Watch the BUFDG highlights video (bufdg.ac.uk/events/confere…)
to hear from delegates from
- Casenove Charities (Schroders Group)
- Woodsford Tradebridge
- TouchNet Information Systems, Inc. (PS Terry enjoyed the golf.)

The BUFDG meeting is rife with conflicts of interest. It looks like cash-for-access: "The sponsor delegate fee for the whole conference is £2,950 + VAT per person, or £5,500 + VAT for a package of two people."

This year BUFDG was in Hull. Mercer were there again, of course:

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In fairness to Hull, it seems that this year the meeting was more focussed on specific issues, with less time for mind-readers, comedy, history, celebs, etc. You can read about it here: bufdg.ac.uk/BUFDG_Umbraco/…

END 🧐😑😴💤