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Expert panel publishes first report on USS pension scheme

The Joint Expert Panel (JEP) set up by the University and College Union (UCU) and Universities UK (UUK) following the recent industrial dispute over the Universities Superannuation Scheme (USS) has published its first report. In order to keep staff informed of key updates in the sector, a summary of the report and links for more information are provided below.

The Panel comprises senior figures from the pensions sector as well as academic experts from within higher education and is chaired by Joanne Segars OBE. The composition of the panel was agreed between UCU and UUK in May.

Today’s report makes a number of observations and recommendations regarding the 2017 valuation of the USS pension scheme. In particular, the panel unanimously recommends four areas where adjustments to the valuation should be considered:

  1. A re-evaluation of the employers’ attitude to risk, which would result in a re-evaluation of the reliance on the sponsor covenant.
  2. Adopting a greater consistency of approach between the 2014 and 2017 valuations, which affects the scale and timing of deficit recovery contributions.
  3. Ensuring fairness and equality between generations of scheme members by smoothing future service contributions.
  4. Ensuring the valuation uses the most recently available information which means taking account of recent market improvements, new investment considerations and the latest data on mortality, for example.

Both Universities UK, which formally represents the collective view of more than 350 USS employers, and UCU have welcomed the report.

In launching the report, Joanne Segars said: “In reaching our unanimous conclusions and recommendations the JEP has, of course, had the benefit of hindsight – a luxury not available to the Trustee as it worked to a tight timetable to complete the valuation.

“Neither has it been the approach of the Panel to be critical of any party that has been involved in the valuation. Our observations, conclusions and recommendations are intended to be constructive and should be read in that spirit.

“The Panel does not underestimate the practicalities of concluding an actuarial valuation so long after the process began. However, the Panel believes it would be in the public interest if all stakeholders, including the Regulator, could find a way forward to implementing our recommendations within the 2017 valuation.

“We believe that our constructive and practical proposals for adjustments to the valuation can be implemented quickly and act as the cornerstone for a negotiated settlement. Ultimately it will be for all the parties to decide whether to respond positively, but we believe that the report provides a genuine opportunity to turn the page, to focus on the long-term stability of the USS and rebuild trust and confidence in the Scheme. 

“Our report and its recommendations do not address all the issues faced by the Scheme. We believe further work is required by the JEP. This should include developing an approach to the valuation that is clear and which can deliver a sustainable scheme based on a shared set of principles. 

“I would like to thank the many scheme members, employers and experts who have submitted views and evidence to the JEP. I would also like to thank USS for their cooperation and for the considerable resources they have laid at our disposal. While we have been grateful for all the support we have had the conclusions are ours alone.”

You can read UUK’s and UCU’s responses to the report on their websites.

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By: Sean Armstrong
Last updated: Friday, 21 September 2018