Higher education sector pension scheme governance
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British higher/further education institutions are typically set up as Trusts themselves and are not for profit. As highly regulated entities, they require clear governance and experienced people to help support them.
What’s the challenge?
The challenge facing the sector is the expectation these entities should operate as competitive businesses.
However, with the highly regulated environment and escalating costs in the economy, this can create tensions.
With over 45% of universities reporting an operating deficit in 2026 and 50 institutions at risk of closure, new regulation hasn’t offered any new significant changes that can support the sector. Institution have been left to work through their business model and make changes.
For organisations that rely on governance and have strong pension ties, how can we at Vidett support their future?
Supporting a strong balance sheet and employee value (value for contribution)
Many universities have clear growth strategies and need to re-invest any capital they have to help attract students. A strong balance sheet unaffected by pension changes can be key to peace of mind.
Some institutions are running cost saving initiatives to outsource services and reduce headcount. A key area for this can be pensions. Without some professional assistance the result can be an important part of the employee value proposition being devalued. Issues we’ve seen include:
- poor service offering from outsourced providers
- expensive adviser and service provider fees
- issues complying with governance requirements, like member nominated trustee challenges.
- lack of expertise and insight that can offer value to members and help manage risk within the pension scheme
- poor investment returns and more cost to the scheme sponsor
What solutions are there?
Independent trustees
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A simple solution can be to add an independent professional trustee to a board or committee to support member nominated or employer nominated trustees/professionals. With their wider industry insight and dedicated time to drive value, we’ve seen growing interest for our trustees within the sector. This is also true for organisations with a declining population of member nominated trustees who are finding compliance hard.
Outsourced governance
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Similar to the move many education institutions have made in outsourcing pensions administration, it’s also possible to outsource pensions governance. It’s a cost-effective way to leverage expert knowledge without carrying ongoing in-house costs.
On demand assistance with independent decision-making, adviser selection, employee communications, engagement with scheme management entities and broader review projects can be provided by governance experts whenever needed. Resource can be flexed as project needs of university pension arrangements change over time.
Support models vary between secondments, specific one-off project support, membership of governance committees and shared service models across institutions. Uniquely tailored service/pricing models to suit all situations deliver efficiencies and economies of scale that in-house teams can struggle with.
This approach offers access to expertise, peace of mind and agility to manage cost and risk.
Independent oversight professionals
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Many sponsors seek to ensure oversight of any third party services, which can include Master Trusts and outsource pension providers. Through an Investment Committee or Governance Committee, a cost effect way to support value and good outcomes can be use of an independent person. We support many committees to oversee their outsourced services cost effectively.
What expertise can be leveraged?
Working with Vidett’s dedicated governance experts creates benefits for higher education pension arrangements by drawing on our diverse range of backgrounds and expertise.
This includes experience across all pension disciplines and arrangements offered across the sector. We also bring valuable wider experience across all types of corporate situations, including restructuring exercises. In practice, it means our governance specialists have the expertise and resources to meet the challenges of the sector in a way that works best for each institution.
The sector needs a special focus and understanding with multi-disciplinary support. Our team approach means you access the right person or people for each situation with comfort they’re already up to speed on sector issues and events. Contingency planning is built in too as every client has a Vidett team supporting them, removing key-person risk if anyone retires, moves on or is otherwise out of action.
What about endowments and other governance structures?
Our professionals are experts at overseeing large pools of assets and many higher/further education institutions manage endowment funds without the level of disciplined governance required for pension schemes.
Improving governance of these arrangements and leveraging synergies with pension schemes can bring material benefits in terms of performance and alignment to sector environmental, social & governance (ESG) considerations.
Having the right people in place supporting you helps ensure scheme members are put first, without compromising the complicated needs of employers and scheme sponsors.
This is also true for oversight of define contribution (DC) master trusts, where contributions are being paid each month but is the university gaining value? Governance oversight can be easily established to ensure value for money and clear reporting to manage risk for you.
With over 45% of universities reporting an operating deficit in 2026 and 50 institutions at risk of closure, new regulation hasn’t offered any new significant changes that can support the sector. Institution have been left to work through their business model and make changes. For organisations that rely on governance and have strong pension ties, how can we at Vidett support their future?
Download our case study
Click the ‘Download’ button for further information on our board effectiveness services.
Who can help?
For more information or a quick discussion about how Vidett can help your institution contact our higher education team leader, Martin Collins:
Phone: 0300 180 0271 or 07884 235070
Email: Martin.Collins@vidett.com