In September, the USS Trustee consulted UUK (as the employer representative) on a Schedule of Contributions, Recovery Plan and Statement of Funding Principles. These documents form part of the formal completion of the 2020 valuation, capturing the agreed approach to funding the scheme. The documents sent out for consultation reflected the JNC decision in August to adopt UUK’s proposed schedule of benefits and contributions.
You can see the consultation documents and a briefing by Aon, UUK’s actuarial advisers, on the USS employers website, as well as a summary of the employer responses.
UUK briefly consulted with its members, including the University of Cambridge, in order to draft its response to USS. You can read the University’s message to UUK, which was approved by the Finance Committee and Council and sent to UUK on 20 September.
The University supported the comments made in the Aon briefing, including:
- It is unnecessary for the USS Trustee to increase contributions by 0.5% overall (split 0.3% employers, 0.2% employees) from 1 October 2021. A preferable approach would be to retain a combined contribution rate of 30.7% in our view, at least until April 2022.
- It is concerning that the USS Trustee states that 18 years is an unusual recovery length and that they would typically expect shorter recovery periods at future valuations. We do not regard 18 years as unusual for the scheme specific circumstances of the USS (including the proposed 20-year moratorium).
In its response, the University also urges UUK and UCU to explore the mechanism (suggested by UCU JNC negotiators) to defer the inflation cap on new accrual with the expectation (especially if a more effective scheme design is delivered) that it can be removed permanently at the next valuation. If achieved, this would have the effect of significantly reducing the detriment to members on Defined Benefit accrual, for a very small additional cost.
The University’s position in relation to the overall valuation, as set out in its previous consultation responses and in the joint statement with Oxford University and Cambridge and Oxford UCU branches, remains unchanged. In particular, the University considers that the problems are largely created by an unnecessarily conservative approach to risk taken by the USS Trustee which in turn is substantially driven by a regulatory and actuarial approach in the UK that is inappropriate for a scheme such as USS.
For more on the University’s position and the next steps in the 2020 valuation process, you can watch a video of a recent open meeting (Raven login required) with Anthony Odgers, University Chief Financial Officer, and Daniel Weiss, Cambridge UCU pensions rep.