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University of Aberdeen Superannuation & Life Assurance Scheme (UASLAS) Funding and Investment 11 June 2013

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2 Funding and investment “Can you explain why the monetary value of the fund at present is more than last year, whilst the perceived hole is larger?”

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3 Monetary value of fund

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4 Investment returns +7.9% per annum –2 years (approx*) to 30 June 2012 +17.4% –9 months to 31 March 2013 *From 7 September 2010, date of change of investment manager

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5 How are the assets invested?

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6 Investment returns: equity indices

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7 Investment returns: bond indices

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8 Asset classes compared

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9 The question again? “Can you explain why the monetary value of the fund at present is more than last year, whilst the perceived hole is larger?”

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10 Deficit

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11 Putting it in context Source: National Institute of Economic and Social Research (NIESR)

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12 UASLAS not unique

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14 Two sides to every deficit

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15 Annual increases

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16 Liabilities Significant increases in “value” –Does this make sense? Halifax house price index (Scotland) –393Q –407Q % in 9 months

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17 Bank of England base rates

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19 Mortgage example £500 a month Base rate + 2% 7% p.a. interest 25 year term £500 a month Base rate + 2% 7% p.a. interest 25 year term £500 a month Base rate + 2% 2.5% p.a. interest 25 year term £500 a month Base rate + 2% 2.5% p.a. interest 25 year term

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20 Annuity rates (monetary cost)

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21 In a nutshell One person’s liability is another person’s asset

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22 Any questions?

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