UPDATED: The University has published its views on the assumptions and approach to be adopted for the 2018 valuation.
This article was updated on 9 April 2019
The University submitted its views to UUK, which has responded to USS on behalf of all employers who participate in the scheme.
Read the University's response
UUK wrote to USS in March with a summary of employer responses to the consultation. The USS Trustee is expected to respond to UUK in early May. Originally the Trustee was expected to respond in early April, but this response has been delayed.
Employers were asked to comment on the assumptions to be used in the 2018 valuation, and in particular on the ‘contingent contributions’ being proposed. These would require members and employers to pay additional contributions into USS if the financial position of the scheme deteriorated significantly during the next valuation period. The University's response was broadly in line with those of other universities.
The University supported UUK’s proposals as set out in the paper 2018 Valuation and Contingent Contributions dated 27 February 2019. These would result in an overall contribution rate to USS of 29.2 per cent, with 9.1 per cent to be paid by members and 20.1 per cent by employers. This is slightly higher than the overall rate of 28.3 per cent that will apply from 1 April 2019 under the first phase of cost-sharing, but significantly lower than the rates that would apply if the second and third phases of cost-sharing were implemented.
UUK’s proposal also provides for contingent contributions of up to 3 per cent, to be split 65:35 between employers and members. These would only be triggered if the deficit reached £10billion over two consecutive quarters, and payment would be phased in in steps of 1 per cent and reviewed after one year. There would be a six-month notice period before the implementation of any contingent contributions.
In its response, the University noted that the contingent contribution mechanism, and the valuation approach more generally, should be reviewed at the earliest opportunity following the second phase of the Joint Expert Panel’s review of USS and its valuation methodology. It requested that there be an option to trigger a valuation as at 31 March 2020 if the JEP has completed its review by then.
In appendices to its consultation response, the University set out its own analysis of USS’s proposed approach to the valuation, to contingent contributions, and to the assessment of risk. On this analysis, the University believes the overall contribution rate could be as low as 29 per cent, with contingent contributions set at 2.5 per cent. It also outlined some alternative approaches to measuring scheme self-sufficiency that would produce less volatile results than the current measures, and so make long-term planning easier for both USS and employers.