SAUL Consultation

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The Superannuation Arrangements of the University of London

Why are changes to SAUL proposed?

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Preliminary results of the 2011 Actuarial Valuation show that the value of SAUL's Liabilities (the value of benefits promised to SAUL members) is £1,587 million. The value of SAUL's assets was £1,506 million, so there is a funding shortfall of £81 million.

The preliminary results also show that the cost of funding the benefits is equal to 26.6% of Active Member's Salaries. SAUL receives contributions of 19% of members' Salaries (6% from members – directly or as part of a Salary Sacrifice arrangement – and 13% from Employers).

The SAUL Employers and Trade Unions must decide how to:

address the shortfall in the funding level; and
make up the difference between the contributions SAUL receives and the cost of providing members' benefits.

The Trustee asked the SAUL Negotiating Committee – which has an equal number of representatives from the Employers and the recognised Trade Unions – to discuss options and form a plan. The Negotiating Committee has recently reached agreement in principle and given the Trustee a proposal for change.

Long-term funding pressures

As well as the funding shortfall, there are long-term funding pressures on SAUL. These include the following:

Longer lives – since SAUL was set up in 1976, life expectancy has increased by several years and members' benefits have improved. This means SAUL has to pay better benefits for longer than expected. Lifespan is expected to continue rising.
Financial market conditions – the continued uncertainty since the financial crisis means that SAUL cannot rely on future investment returns to bridge the shortfall between the cost of building up pension benefits and the contributions SAUL receives as well as eliminating the funding shortfall.
Reductions in higher education funding – increased pressure on Employers' resources means the cost of pensions cannot rise without affecting the services Employers provide, and possibly their staff numbers.

The SAUL Employers and Trade Unions have agreed, in principle, to support changes that are expected to tackle the funding shortfall and long-term funding pressures without increasing contributions for members and Employers.

Superannuation Arrangements of the University of London
1 King’s Arms Yard, London EC2R 7AF

Website last updated 18 May 2012