USS consultation - 22/03/2019
Established in May 2018, the Joint Expert Panel (JEP) was established to examine the 2017 valuation of the Universities Superannuation Scheme (USS) and has recently asked universities for their views on improvements that could be made to the valuation process and governance.
Submission to the Joint Expert Panel (JEP) – Second Phase
In response, the University has called for greater openness and transparency in the valuation process. It has also called for the views of all interested parties to be considered and to avoid discussions on a rolling three-year basis.
The University’s response was prepared in consultation with the University’s USS Actuarial Valuation Technical Group.
The Technical Group, chaired by the University’s Deputy Vice-Chancellor Professor Karen Holford, was established to help engage a wide variety of university stakeholders.
Over the last year, the Group has met with Bill Galvin, Group CEO at USS, and engaged the services of an independent actuary to inform a response on behalf of the University and its USS members to the first phase of the JEP’s work.
Also included in the University’s response to the second phase is a letter from Dr Woon Wong from Cardiff Business School who has written to the Pensions Regulator questioning the USS deficit.
Deputy Vice-Chancellor, Professor Karen Holford said: “I am extremely grateful to members of our Technical Group who’ve contributed and shaped the University’s response.
“It was clear from the Technical Group’s discussions that there is a need for greater transparency and discussion with all parties.
“It’s essential we find a long-term and sustainable way forward for the USS pension scheme that meets the needs of employees and employers alike.
“This collaborative approach, I believe, will help us achieve this objective.”
The University’s response to the call for submissions and a copy of Dr Wong’s letter is available here.
UUK consultation on proposal for a contingent contribution structure
The University has also published its response to UUK’s consultation on the 2018 USS valuation assumptions and proposals for a contingent contribution structure.
In February 2019, the USS Trustees set out a framework for contingent contributions to support the employer covenant and AON were appointed by UUK to develop proposals.
AON have proposed a Trigger Metric that would only be implemented if there has been a “significant deterioration” in the financial position of the Scheme.
This would result in contingent contributions of 1%, 2% or 3% being paid to the Trustee after a 6 month notice period and would only apply until the next valuation in 2021.
AON have based their proposal on a range of total contributions of 29.2% to 32.2% of salary, dependent on contingent contributions.
In response, the University renews its call for greater transparency in the assumptions adopted by the Trustees. However, whilst questioning whether contingent contributions are necessary when the Scheme has triennial valuations, it pragmatically supports the contingent contribution proposals to hopefully enable the changes to be implemented in October 2019.
The University’s response was agreed by the University’s Executive Board (UEB) on 11 March.
The full response can be found here.
UUK will now collate responses from employers and submit a collective response to USS next month.
USS remains one of the largest private pension schemes in the UK and is the principal scheme for academic and comparable staff in UK universities and other higher education and research institutions.