The latest development in the ongoing USS saga sees the revelation that USS themselves seem to have failed to correctly apply their own ’Test 1’, and that when this is corrected there is no deficit in the scheme as of March 2018. If there is no deficit, then there is no longer any argument for any change to our contributions or for any ‘benefit reform’, the euphemism we hear often which means changes to how much we receive in pension, and the means by which it is calculated. This seeming flaw has been exposed by Sam Marsh, a member of the Joint Negotiating Committee (JNC). ‘Test1’ and ‘self-sufficiency’ The USS have three tests which they apply in coming to a valuation.* Test 1 considers the viability of achieving a ‘self-sufficiency’ position in 20 years. ‘Self-sufficiency’ is, in effect, a position whereby all owed pensions can be paid without any further contributions to the scheme from employers or employees. The Joint Expert Panel (JEP) expressed concern about Test 1 as “given too much weight in determining the valuation and its effects extend beyond its original purpose” (p. 8) and that specifically “Test 1 drives the investment strategy toward a low return … continue reading

Members will have received communications recently from the University and from UCU about the USS’s consultation over proposed changes to our pension. The consultation is a requirement upon USS, and was originally deferred as a result of the outcome of the dispute earlier this year, when it was originally scheduled for June. One of the important proposals that caused members to vote to freeze our dispute earlier this year, was the creation of the Joint Expert Panel (JEP) that would look into the pension valuation. We therefore don’t recommend that members respond to the USS consultation until the JEP reports. Leeds UCU will be in touch with members again once we have considered the implications of that report, with some recommended responses to the consultation. There’s no rush – you have until Friday 2nd November to respond to the consultation.Members who want begin to consider responding to the consultation, or wish to do so before the JEP reports, might wish first to read the recent UCU briefing for members on this issue. And perhaps read Sheffield UCU’s commentary on Twitter here.  The questions asked in the consultation cover: The removal of the 1% matchProposals over contributions above the salary thresholdIncreased contributions … continue reading

Members will be receiving an ‘urgent update’ from the USS trustee today. We would like to offer some further information on this update. We note that the trustee points out that “we rely on the employers’ collective financial strength and continued existence and ability to support member benefits over multiple decades” but avoids giving you the detail on this. USS’s actual assumption is that sponsoring employers will remain solvent for at least the next twenty years, and, moreover, in sufficient robust financial health that they could increase their employer pensions contributions to up to 25% of payroll (+7% more than the current 18%) for the duration of those twenty years. So, the USS make an assumption of affordability and increase in employer contributions that the employers nonetheless repeatedly deny – they can’t have it both ways. As for the other assumptions they address in this urgent email, The USS and their actuarial advisers, Mercer, did list the assumptions used on page 106 of the most recent Report. In brief, they assume: 1. A fall in the expected long-term nominal investment return from 4.7% to 2.83% pa. 2. An increase in general pay growth in the year following the valuation from … continue reading