USS pensions – Joint Expert Panel report published

A report is published today at http://www.ussjep.org.uk/ by the Joint Expert Panel (JEP), which was established to examine the valuation of the Universities Superannuation Scheme (USS).

The JEP was tasked with agreeing key principles to underpin the future approach of the University and College Union (UCU) and Universities UK (UUK) to the USS valuation – as outlined in the panel’s terms of reference.

The University remains fully supportive of the Joint Expert Panel in its examination of the valuation. It is hoped that this will aid positive discussions between Universities UK, the University & College Union, the USS Trustee and the government’s Pensions Regulator, in meeting UUK’s pledge of continuing to offer valuable defined benefits as part of the overall scheme.

Universities UK and the University & College Union have both welcomed the report, issuing the following statements.

Alistair Jarvis, Chief Executive of Universities UK, which formally represents the collective view of more than 350 USS employers, said: “We are pleased to receive the Joint Expert Panel’s independent examination of the USS valuation processes and assumptions. We hope that it will create the space for UCU and UUK to find common ground to conclude the 2017 valuation.

“The panel has recommended possible ways of reducing the deficit and the cost of future defined benefit provision, and has recognised that reaching agreement may require compromise from all sides. Potential responses include employers taking on greater levels of risk, stakeholders paying higher contributions, the trustee updating the valuation assumptions and stakeholders agreeing some moderate adjustment to benefits. Any solution is likely to require a combination of these and must be consistent with the statutory and regulatory duties of the USS Trustee and the Pensions Regulator.

“Next week, we will start to consult all USS employers on their views on the panel’s recommendations to inform talks with UCU and the USS Trustee. This will include examining employers’ willingness to accept greater levels of risk and to pay more into the scheme than their current contribution level of 18% of salary. Our engagement with stakeholders will aim to establish which areas highlighted by the panel can be adopted. We look forward to positive discussions with UCU, the USS Trustee and the regulator, so that we can meet our pledge of continuing to offer valuable defined benefits as part of the overall scheme and concluding the 2017 valuation.”

UCU general secretary Sally Hunt said: “It has been a longstanding objective of UCU to secure an independent assessment of the valuation and this first report is a significant landmark in our ongoing campaign to defend members’ pensions. This is a substantial piece of work and we hope that all parties will engage seriously with the report’s findings. We welcome the JEP’s proposal that the valuation should be adjusted and are also encouraged that the panel now wishes to look in detail at alternative methods for future valuations. There is no doubt that we have come a long way from this time last year when we faced plans to impose a defined contribution benefit package that would have seen some members lose around £200,000 in retirement.”

The Joint Expert Panel process runs in parallel to the current USS consultation which seeks scheme members’ views on a USS proposal to phase increases in contributions from both employers and members from 1 April 2019, to cover the cost of securing future service benefits under the defined benefit scheme.

Chaired by Joanne Segars OBE, the panel has an equal number of nominees made by the University and College Union and Universities UK.

UCU nominees: Saul Jacka, a Turing fellow and professor of statistics at the University of Warwick; Deborah Mabbett, a professor of public policy at Birkbeck, University of London; and Catherine Donnelly, an associate professor at Heriot-Watt University, where she leads the risk insight lab focusing on pensions, investment and insurance research.

Universities UK nominees: Ronnie Bowie, Partner at Hymans Robertson and inaugural President of the Institute and Faculty of Actuaries; Sally Bridgeland, former CEO of BP Pension Trustees Limited and consultant at Aon Hewitt; and Chris Curry, Director of the Pensions Policy Institute.

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