USS valuation working group
On behalf of the University’s USS (Universities Superannuation Scheme) valuation working group, Ian Wright, Deputy Director of HR, outlines the latest position in the ongoing valuation process.
"Our University has brought together academic and professional services colleagues and University and College Union (UCU) representatives on a joint USS valuation working group to better understand the complexities of the pensions valuation process and the various drivers behind it, as well as the impact of each of them.
"As a member of the working group, I’m pleased that our work has helped inform the University’s response to the various consultations with employers since its inception in 2017.
"What has become clear in undertaking this work is that we share common aims in wanting a good quality pension provision for staff with sustainable contribution rates, and in wanting clarity over the health of USS.
"In September 2018, in line with our recommendations, the University publicly welcomed the report of the Joint Expert Panel (JEP) which was created to suspend the dispute which has had such a negative impact on our staff and students. We continue to support its recommendations, which we believe offer a viable solution to the current dispute.
"We believe that the proposals put forward by the JEP report strike a reasonable balance between the desire for sustainable contributions and the capacity and willingness of employers to accept a greater level of risk. We support the JEP’s view that the USS Trustee’s approach has been overly risk averse.
"The USS Trustee has now concluded the much disputed 2017 Valuation with the result being a reported deficit in the scheme of £7.6bn and increasing costs for both employers and members on a phased basis from April 2019 to April 2020 and beyond. USS members will have received details of these cost increases recently directly from USS.
"The USS Trustees have launched another valuation - the 2018 Valuation - to consider the JEP recommendations. All employers have been consulted on the Technical Provisions; the assumptions on which the health of the scheme is assessed. We are keen that this valuation concludes by the summer of 2019 to ensure that the cost increases as a result of the 2017 Valuation do not need to be fully implemented.
"Unfortunately, the USS Trustee (who ultimately is responsible for undertaking the valuation) said in its consultation document that the JEP recommendations carry more risk than they are prepared to accept and so are not proposing implementing all of them.
"The USS Trustee has invited employers, through Universities UK (UUK), to outline how they might underwrite the additional risks they perceive through applying the JEP recommendations to help bring the cost of contributions down. UUK, on the advice of its actuaries Aon, has therefore put before employers some proposals it considers viable and acceptable to the USS Trustee.
"Our recommendation to the University Executive Board (UEB) and the University Council is that such contingent support remains unnecessary. We have recommended the University continues to support the implementation of the JEP proposals in full. We believe that there is sufficient evidence that, notwithstanding the many challenges ahead for the HE sector, the collective strength of the USS employers is adequate to support a less risk averse position being taken.
"However, we also understand that if employers do not agree to accept some form of additional contingent support to the scheme, the cost of benefits outlined by the USS Trustee (33.7 per cent) is very likely to be too high for employers (and probably many members) to accept. In such circumstances there would need to be a further discussion between employers and UCU over benefit changes and we consider this risks reopening the potential for a further escalation of the dispute between employers and UCU.
"Our working group has therefore recommended that the University should accept, albeit grudgingly, the proposals put forward by UUK on the matter of contingent support. It should be noted that our local UCU branch representatives do not support the proposals for any cost increases triggered within the contingent support arrangements being shared between employers and members."
"You can find details of the background onn the USS Valuation - updates and latest news page
"Both UEB and Council have endorsed the recommendations of our working group and the University has therefore submitted its response to this latest consultation. As with all the University’s responses to these consultation exercises, it will be published on our web pages. We now await the combined submission from UUK to USS on behalf of all employers and the USS Trustee’s response to the consultation feedback.
"Looking to the future, the JEP has launched Phase 2 of its work and we welcome the opportunity and prospect of seeking a more suitable, transparent and stable position from which to assess the health of USS at future valuations.
"We appreciate that this issue is taking time to resolve. It is our hope that we can find a jointly acceptable way through the current valuation and, following the outputs from the JEP’s Phase 2 work, be in a stronger position to manage the future of USS together in the best interests of current and future members of the scheme and those employers which support it.
"We will continue to update our web pages with developments on this important issue."
Members of the USS Valuation Working Group:
- Laura Carter - Deputy Pensions Manager
- Suzanne Duke - Head of Reward
- Dr Jo Grady - Sheffield UCU Pensions Officer
- Robert Hebblethwaite - Assistant Director of Finance
- Prof Mike Hounslow - Vice-President & Head of the Faculty of Engineering
- Prof Steven Julious - Medical Statistics Group, School of Health and Related Research
- Dr Moty Katzman - School of Maths & Statistics
- Dr Sam Marsh - Sheffield UCU Branch President
- Ian Wright - Deputy Director of HR
The USS scheme is the principal pension scheme provided by pre-92 universities and other higher education and associated institutions in the UK. Here at Sheffield we have around 5,200 members at Grades 6 and above.
Every three years, USS carries out a valuation – which includes a detailed analysis of the factors that influence the scheme’s funding position; the balance of assets held by the scheme and the current and future benefits promised to members (the liabilities). For more information on the current valuation, see FAQs prepared by UUK.
Staff on Grades 1-5 are eligible for the University of Sheffield Pension Scheme. Some staff working within the Medical and Dental School are able to participate in the NHS Pension Scheme (NHSPS), the principal pension scheme provided by the National Health Service in England and Wales.
Defined benefit pensions schemes everywhere are facing similar challenges and we continue to represent the views of our University and members to help find solutions for the benefit of everyone in relation to those schemes in which we participate.