On the go: Universities UK, which represents 340 Universities Superannuation Scheme employers, has written to the trustees of the scheme urging a rethink of its valuation outcomes.
Pensions Expert reported last week on the defined benefit scheme’s latest valuation results, which showed a deficit quadrupling to more than £14bn, and requires employers to increase their contributions from 30.7 per cent to 42.1 per cent of payroll under the most favourable scenario.
However, if employers do not agree to a series of conditions, the rate hike could be as high as 56.2 per cent. UUK said at the time that the proposed figures were “unaffordable”, while the Universities and College Union warned it “cannot rule anything out” in terms of reaction to the new rates.
UUK has now written to the USS trustee complaining that the proposal “takes very little account” of its response to the technical provisions consultation and the conclusions of the Valuation Methodology Discussion Forum.
In its letter to USS trustee chair Dame Kate Barker, UUK acknowledged that the status quo was untenable, but added: “We have not received strong or clear justification for the very high pricing decisions and, as such, employers are very concerned that the scheme is facing an unnecessary and unjustified level of reform.
“The very high prices for current benefits put forward by the USS trustee are unaffordable for employers and will risk pricing even more staff out of the scheme, particularly those at early stages of their career, thereby increasing even further the current intergenerational unfairness evident within the scheme,” the letter stated.
“It also undervalues the collective and enduring financial strength of the participating employers.”
UUK is seeking a formal review by the trustee of the illustrative outcomes stemming from the valuation, and pushed back against the trustee’s “positioning” that the outcome of the valuation is purely dependent upon employers.
“Fundamentally, it is down to the USS trustee’s own decision-making about the price of benefits, and the value it proposes to attribute to additional covenant supporting measures,” UUK stated.
“There is a clear implication that all employers need to do is to provide further covenant support, and that if employers do not provide this then employees need only blame employers.”
It argues that this is unreasonable, and that the “pitting of stakeholders against each other” is “unhelpful and opportunistic”.
UUK also questioned the Pensions Regulator’s influence over the valuation.
