On the go: The Universities Superannuation Scheme has swung into a £5.6bn surplus, according to its latest monitoring report, offering the possibility of “positive choices” regarding future contribution rates, while sparking fury among those taking strike action against scheme reforms.
Sixty-seven universities will go on strike on November 30 over changes to benefits that followed the scheme’s March 2020 valuation, which yielded a £14.1bn deficit.
They carried out industrial action on November 24 and November 25, amid a wider strike over university pay that saw 150 institutions walk out.
Earlier in November, Professor Steve West, president of Universities UK – which represents USS employers – stood by changes to pensions and stressed that the monitoring reports are “not comparable to a full valuation”.
The scheme’s assets slumped from £88.9bn at March 31 2022 to £72.6bn at September 30, a movement attributed to falling equity and bond prices.
Its technical provisions liability, however, dropped sharply compared with the March 2020 valuation figure, falling from £80.6bn to £67bn. This was due to rising real gilt yields, which were partly offset by higher inflation expectations, the USS said.
“Total contribution requirements (including deficit contributions) are significantly lower than at the valuation date based on the monitoring approach,” the report said.
In an update on November 28, USS chief executive Bill Galvin echoed West’s cautioning over the monitoring reports, claiming that they “should not be seen as an indicator of the likely outcome of an actuarial valuation: they indicate – at best – the direction of travel, rather than the destination”.
“The trend for some important indicators (such as long-term real interest rates) heading into the 2023 valuation is more positive than for any valuation since 2011,” he admitted.
“These changes in the economic backdrop, in tandem with the benefit changes and covenant support measures introduced earlier this year, indicate that the scheme may well be in a more robust position, which may provide stakeholders with options.
“If the trustee’s in-depth and considered assessment under the 2023 valuation finds that the required overall contribution rate going forward provides the UCU and UUK’s representatives on the [Joint Negotiating Committee] with some room for manoeuvre, they will have some positive choices and trade-offs to consider.”
In a statement, the University and College Union said that employers “must now commit to restoring benefits”.
The data “shows that the cost of restoring benefits is estimated as 24.4 per cent, lower than the 31.4 per cent in contributions currently being paid for a package of cuts forced through by employer body UUK in April this year”, the UCU said.
“Not only is the scheme reporting a significant surplus, but the trustee’s own data shows that cuts can be revoked and benefits returned for much lower cost,” UCU general secretary Jo Grady said.
“On [November 30], staff will take further strike action at universities across the UK. If there is no commitment forthcoming to restore pension benefits, there will be further disruption in the new year – our members are going nowhere. The clock is ticking.”
