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

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?”

3 Monetary value of fund

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

5 How are the assets invested?

6 Investment returns: equity indices

7 Investment returns: bond indices

8 Asset classes compared

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?”

10 Deficit

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

12 UASLAS not unique

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14 Two sides to every deficit

15 Annual increases

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

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

20 Annuity rates (monetary cost)

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

22 Any questions?