×
First-time login tip: If you're a REBA Member, you'll need to reset your password the first time you login.
10 Oct 2017
by Laurence Hopkins & Richard Paul

Laurence Hopkins & Richard Paul: Improving financial understanding and wellbeing in higher education

Like other parts of the economy, the higher education (HE) sector has faced funding and sustainability challenges since the 2008-09 recession. This has had an impact on both universities and their employees, resulting in organisational change, benefit reform and pay restraint.

 

A335-1507287547_ProfessorhelpingstudentMAIN.jpg

 

While universities have departments focused on the financial well-being of students, assisting in the financial education of staff is a more recent development.  

HE funding and decision-making

Financial well-being is now at the top of the benefits agenda in HE. However, it was actually dialogue and understanding about sector finances that was the prime focus immediately after the downturn.

Following a three-year pay deal worth 16%, the sector pay award dropped to 0.5% in 2009. As part of this settlement it was agreed that the trade unions and employers, represented by the Universities and Colleges Employers Association (UCEA), would develop materials to increase understanding of the technical aspects associated with HE funding and financial-decision making.

This resulted in the publication of the Insider’s Guide to Finance and Accounting in Higher Education. The guide remains an important resource for both trade union representatives and others in the sector who want to understand the complexities of sector finances and has been recently supplemented by UCEA’s infographics on sector finances.

Pension reform

Demystifying financial terms and understanding why surplus doesn’t mean ‘surplus to requirements’ helps with employee relations, but the benefits of the joint work were primarily limited to trade union representatives rather than the wider workforce. Benefits relating to personal finance at that time tended to be limited but pension reform has driven the issue to the forefront.

A decade ago, all the main HE pension schemes provided final salary benefits. Now we see a mix of defined contribution, hybrid and career average defined benefit schemes. The significant growth in DC provision in particular presents HE employees with an entirely new approach to retirement, requiring greater personal responsibility on issues such as pension saving and investment choice.

Add to this a raft of legislative change covering pension tax allowances, auto-enrolment and removal of the default retirement age and the complexities in HE pension provision are plain to see.

Financial education

Universities recognise that pension reforms in particular present the need to consider financial well-being for staff. Financial education is now commonplace amongst many universities and is often tailored to staff at various stages of their career, for example Early Career and Financial Fairy Tales delivered by the University of Lincoln and pre-retirement training at Queen Mary University of London.

Many UK universities also facilitate education sessions for staff affected by changes in the pension tax allowances.

Benefits changes

Universities have taken opportunities to adapt the employee benefit package to help support staff and relieve pressures on personal finance.

For example, the University of East London offers a non-contributory pension scheme which has reduced the numbers of staff that have previously opted out of pension saving because of affordability.

The University of Sheffield’s Flexible Retirement Plan allows employees in its first five grades to flex their contributions, while the University of Lancaster provides free bus passes for staff in its lowest paid grades.

None of these schemes offer a panacea to financial difficulties, but the sector’s competitive pay, pensions and benefits package ensures that staff are supported both as employees and as people. With an economic environment that remains challenging, universities will continue to make positive steps forward in this important area. 

This article is written by Laurence Hopkins, head of research and Richard Paul, senior pensions technical adviser at the UCEA

 

Laurence Hopkins 3830-1507287413_RichardPaulSQUARE.jpg

 

Related topics