USS pension — March 2019 valuation — consultation response

March 20th, 2019

Following the March 2019 valuation of the USS pension, the University has responded to the latest employer consultation by Universities UK. The response confirms that the University would accept an increase in employer contributions, as well as contingent contributions if necessary, to resolve the latest valuation.

This would enable reassurance for scheme members over the short-term, and avoid more significant contribution increases for both members and employers under Rule 76, while allowing time for a long-term sustainable solution to be identified.

The response is published in full below and a summary of all universities’ responses has been published online.

University of Nottingham response – March 2019

The University agrees with the direction proposed in the consultation as a means of providing reassurance to scheme members and avoiding the more significant Rule 76 cost-sharing increases that both employers and scheme members would face in October 2019 and April 2020.

In considering the immediate way forward on the March 2018 valuation and taking each of the consultation questions in turn:

  1. Do you have any specific comments on the proposed assumptions for the 2018 valuation, including views on the proposed upper bookend and lower bookend?
    The University of Nottingham supports the assumptions of the March 2018 valuation including the proposed contingent contributions.
  2. Do you support UUK putting forward a proposal for an arrangement for contingent contributions to the USS Trustee as it requested? If not, would you prefer to pay at the upper bookend level, or what would your preferred response be?
    The University has stated previously that the maximum affordable employer contribution is 20%. Whilst at present we believe this would be affordable, the very significant cost pressures on universities as a result of Brexit, the wider economy and any proposed reduction in student fee levels resulting from the Augar Review, mean that it is unlikely to remain so in the longer term.
    Contributions beyond this figure – i.e. the proposed upper bookend – would not be sustainable and would have significant impact on our teaching, research, community of staff and students, and our wider public benefit.
    In the event that contingent contributions were to be triggered, to ensure an appropriate and accurate level of payment, the University proposes that a simultaneous valuation of the USS should be triggered alongside them. This should be accompanied by an acceleration of activity to identify the long-term sustainable solution for the benefit and reassurance of scheme members.
  3. Do you find the proposal for a contingent contributions arrangement set out in the Aon note acceptable, taking all factors into account? If not, what aspects would you wish to change? 
    The University supports the proposal as it enables resolution and reassurance for scheme members over the short-term while allowing time for a long-term sustainable solution to be identified.

In conclusion, the University of Nottingham continues to believe that a sustainable solution is required for the long-term provision of pension benefits to USS members. As such, we support the continued work of the Joint Expert Panel in improving the quality of the valuation and governance processes to ensure they are fit for purpose.

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