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The USS trustee is entering an important period of engagement with employers and other stakeholders as it begins the formal processes involved in the 2020 valuation.

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  • The USS trustee is consulting with employers on the assumptions that will form the basis of the 2020 valuation
  • USS' view on the scheme’s funding position, and what contribution rate is required to fund existing benefits, should be known towards the end of 2020
  • Market losses earlier in the year, the further reduction in long-term real interest rates, and the challenges faced by universities in responding to the coronavirus pandemic, make this a particularly challenging valuation
  • The Joint Negotiating Committee – which comprises representatives of UUK and UCU – will have to decide how to respond
  • An online open meeting will be held for all Cambridge members of the scheme on Friday 18 September at 2.45pm. See below for details on how to join.

In more detail 

The USS trustee is entering an important period of engagement with employers and other stakeholders as it begins the formal processes involved in the 2020 valuation.

The first of these processes is the launch of the formal consultation with UUK (the employers’ representative) on the scheme’s technical provisions. These will determine the funding position and the overall contribution rate required to fund existing benefits.

The consultation is expected to run until late-October. The USS Joint Negotiating Committee (JNC) will then decide whether it is necessary to propose changes to contributions and benefits. If the JNC were to recommend changes, a formal consultation with employees would run in the early part of 2021. An overall timeline is provided on the USS website, although members should note that this has already slipped slightly.

The 2020 valuation is likely to be a challenging one, as recent media coverage has picked up on. It will take a snapshot of the funding position at the end of March 2020, a period when world stockmarkets fell sharply as the coronavirus pandemic took hold, although USS can also take into account significant shifts in market performance over the valuation period. A further challenge is that the yields on real interest rates – an important benchmark used when calculating the cost of liabilities – remain at historic lows, and will continue to inflate the price of providing guaranteed benefits.

Other key factors that will play into the valuation are the covenant strength – the sponsoring employers’ ability to support the scheme now and into the future, as monitored by the Pensions Regulator – and whether universities and members can afford to pay any proposed contribution increases.

UUK, UCU and USS have also been engaged in discussions on how improvements to the valuation methodology might be made. This was one of the recommendations in the second report of the Joint Expert Panel. The outcomes of these discussions have yet to be finalised.

Two other strands of work are underway – a consultation with employers on how the trustee can monitor debt levels across the sector, and a proposal to bind employers into the scheme for a 30-year horizon. Both of these are likely to affect the strength of the employer covenant in the eyes of the trustee and the Pensions Regulator.

What this means for me

It is too early to say how the 2020 valuation might affect members. The current timeline would see USS publish its technical assumptions some time in late autumn 2020. This will be the first view of the cost of maintaining benefits and the size of the deficit. The JNC, made up of representatives from UUK and UCU, would then need to decide how to respond.

Members should be aware that contributions are already scheduled to increase in October 2021. This was established in the 2018 valuation and would see employers paying 23.7% of salaries (up from 21.1%) and employees paying 11% (up from the current 9.6%).

It is also important to realise that all of your accrued defined benefits are protected by law. Scheme valuations have the potential to change future benefits and contribution rates only.

Online open meeting 

Note: this section of the article was updated on 6 November 2020 to provide a link to the meeting recording and to delete instructions for joining the meeting.

There was an an online open meeting on Friday 18 September at 2.45pm, for all Cambridge members of the scheme, with presentations from Anthony Odgers, the University’s Chief Financial Officer (and UUK member of the JNC), and Dr Daniel Weiss, Senior Lecturer in the Faculty of Divinity and Cambridge UCU’s pensions officer.

Watch a recording of the open meeting (Raven login required)

Further information

USS Employers:




04 September 2020