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dc.contributor.authorPlatanakis, Emmanouil
dc.contributor.authorSutcliffe, C.
dc.date.accessioned2016-04-19T09:41:13Z
dc.date.available2016-04-19T09:41:13Z
dc.identifier.citationPlatanakis E and Sutcliffe C (2016) Pension scheme redesign and wealth redistribution between the members and sponsor: The USS rule change in October 2011. Insurance: Mathematics and Economics. 69: 14-28.en_US
dc.identifier.urihttp://hdl.handle.net/10454/8145
dc.descriptionyesen_US
dc.description.abstractThe redesign of defined benefit pension schemes usually results in a substantial redistribution of wealth between age cohorts of members, pensioners, and the sponsor. This is the first study to quantify the redistributive effects of a rule change by a real world scheme (the Universities Superannuation Scheme, USS) where the sponsor underwrites the pension promise. In October 2011 USS closed its final salary scheme to new members, opened a career average revalued earnings (CARE) section, and moved to ‘cap and share’ contribution rates. We find that the pre-October 2011 scheme was not viable in the long run, while the post-October 2011 scheme is probably viable in the long run, but faces medium term problems. In October 2011 future members of USS lost 65% of their pension wealth (or roughly £100,000 per head), equivalent to a reduction of roughly 11% in their total compensation, while those aged over 57 years lost almost nothing. The riskiness of the pension wealth of future members increased by a third, while the riskiness of the present value of the sponsor’s future contributions reduced by 10%. Finally, the sponsor’s wealth increased by about £32.5 billion, equivalent to a reduction of 26% in their pension costs.en_US
dc.language.isoenen_US
dc.relation.isreferencedbyhttp://dx.doi.org/10.1016/j.insmatheco.2016.04.001en_US
dc.rights© 2016 Elsevier. Reproduced in accordance with the publisher's self-archiving policy. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/en_US
dc.subjectDefined benefit; Pension scheme; Redistribution; USS; Scheme design; Risk shifting; Risk managementen_US
dc.titlePension scheme redesign and wealth redistribution between the members and sponsor: The USS rule change in October 2011en_US
dc.status.refereedYesen_US
dc.date.Accepted2016-04-01
dc.date.application2016-04-16
dc.typeArticleen_US
dc.date.EndofEmbargo2017-10-16
dc.type.versionAuthor's final draften_US
dc.description.publicnotesThe full text will be available at the end of the publisher's embargo; Oct 16 2017en_US


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