USS urged to consider expert report in next valuation

This follows an announcement from the Universities Superannuation Scheme’s trustee board setting out a timeline for the next valuation, which will assess the £68.5bn pension fund’s assets and liabilities as of March 31 2020.

USS intends to engage with the University and College Union and Universities UK between now and February before agreeing a methodology.

It has scheduled a formal consultation with UUK on assumptions and proposals to begin in July 2020, with the final valuation and recovery plan due to be submitted to the Pensions Regulator by June 2021 at the latest.

The Joint Expert Panel, set up last year, is expected to publish its second report into the USS’s valuation process soon.

A ‘very short’ valuation timeline

UCU general secretary Jo Grady said the union had already raised concerns that the timeline appeared “very short” and urged USS to be “flexible where necessary to ensure enough time for all stakeholders to be properly consulted”, as it was “crucial” that all stakeholders had enough time to consider the implications of reports and proposals.

“The most important consideration for the upcoming 2020 valuation is getting a fair settlement that all parties can have confidence in,” Ms Grady said. 

“We will shortly receive the second report of the JEP, which we look forward to engaging with fully and hope others will commit to do the same.”

A spokesperson for USS Employers, which represents the pension fund’s 340 employers, said: “It is vital that the 2020 valuation process allows sufficient time for proper consideration of the JEP’s second report and for employers and members to engage with the development of the valuation methodology.

“Following discussions with USS on the proposed draft timeline, we understand there is significant engagement with stakeholders planned before any final decisions are made on the valuation methodology by the USS trustee board in May 2020.

“Employers expect USS to recognise the importance of full and proper engagement on all aspects of the 2020 valuation.”

Contributions rising to 34.7%

Under the scheme’s current recovery plan, based on data from March 31 2018, the combined employer and employee contribution is scheduled to rise from 30.7 per cent of salary to 34.7 per cent from October 2021, in an effort to tackle the USS’s funding deficit.

However, the UCU has consistently argued that employers can shoulder any increase and staff should not be forced to pay more. Its members have staged strikes to protest against the contribution increases, as well as other aspects of their pay and conditions.

In addition, the JEP’s first report, published in September 2018, set out a number of recommendations that it said would reduce the required contribution increase.

In a document setting out the USS’s planned approach to the 2020 valuation, the scheme said it was “committed to doing all we can to support stakeholders through the process that lies ahead”.

It said the JEP’s second report “could be beneficial” to stakeholder discussions, but did not indicate whether it would inform the trustees’ approach directly.

Instead, the document stated that USS would fulfil its responsibilities under the scheme’s rules and its legal obligations, which require a consultation with UUK.

USS promises union engagement 

The UCU’s formal involvement will be through the USS’s Joint Negotiating Committee, made up of UUK and UCU representatives. This committee is responsible for deciding how any increase in contributions is implemented.

“We will engage with the UCU with the aim of ensuring a good understanding of the key issues that determine our decisions,” USS said.

A USS spokesperson added in a separate statement: “The timetable we’ve shared with UUK and UCU’s leadership sets out, at a high level, what needs to happen and by when in order to complete the 2020 valuation by the legal deadline – and some of the challenges this presents.

“Making this clear at the outset is important for us all to be able to work together, constructively and effectively, in the coming months given the relatively challenging timeframe.”

USS has pledged to hold webinars, face-to-face presentations and publish regular updates to improve its communication, which was criticised following the last valuation.