The UK’s Southampton University will close its $55 billion defined benefits pension plan for non-teaching beneficiaries to new members due to an increasing pension deficit.
Future Pension and Assurance Scheme for Non-Academic Staff (PASNAS) members will be transferred into a defined contribution plan in January 2019. The defined benefits pension closes on December 28, 2018.
In order for pension payments to stay the same for existing members, an increase in employee contributions is possible, according to a Southampton spokesperson. Contribution increases will not be decided until July’s triennial valuations are determined.
Unison, the union that represents Southampton’s non-academic staff, called the move “a massive step in the right direction.”
Like many pensions, the plan’s debt has continued to grow, which has led to the closure of many defined benefit plans. The fund had a near $10 billion deficit in March 2017, its most recent valuation. As of July 2015, the plan was 81% funded.
Southampton’s decision comes in the aftermath of the strike against the Universities Superannuation Scheme (USS), which aimed to close the defined benefits element of its hybrid plan to new and existing members.
The strikes, organized by University College Union and Universities UK, caused the scheme to delay any further proposals until the situation is reviewed in April 2019. A seven-member independent committee has been appointed by the two bodies to keep the University Super’s valuation in check.