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USS Update on the 2023 Actuarial Valuation

University’s Position in relation to the UUK Consultation

The University’s position on the areas covered by the UUK consultation on the 2020 valuation was discussed and agreed by Court’s Planning and Resources Committee, and is summarised below.

Covenant support measures

Whilst expressing reservations about Pari Passu in particular, we could accept the UUK covenant support measures or, reluctantly, the Trustee’s proposal to secure a strong covenant, although in both cases we should require a “sunset clause” on pari passu, and challenge the relevance of Metric C.  In relation to the moratorium on exiting the scheme, this should be explicitly linked to the deficit recovery period.

Contributions; Future benefit structures; UUK’s Alternative Approach

We remain committed to providing a pension scheme that is attractive, sustainable and affordable, and that has a meaningful element of defined benefit.  Whilst any increase above current contribution levels presents significant affordability challenges for both employers and scheme members, we have made contingency plans for an increase to 34.7%, and would want to understand the impact of that on the alternative proposal outlined by UUK. Any changes to the benefits package must ensure the retention of a meaningful element of defined benefit, and a level of CPI indexation, although longer term, conditional indexation or benefit models could be explored.

Addressing the high opt-out rate and flexibilities

The possible options for greater flexibility in contributions and benefits should be explored, to understand the potential impact on both costs and benefits.  This should include modelling whether the introduction of tiered levels of contribution related to salary could address aspects of intergenerational fairness.  Care will need to be taken however, not to weaken the fundamental nature of the scheme by introducing too many alternative options, or creating a situation where different institutions offered different pension packages.

Governance

We would support a post-valuation governance review, drawing on the JEP work on valuation methodologies, including revisiting the structure and composition of the Joint Negotiating Committee, and the most appropriate way of ensuring employer, member and independent representation in USS governance.

Important Documents