You will have received an email recently from Jill Nimmo, forwarding a USS communication in which they offer a brief summary of the cost-sharing consultation with members that took place over the summer, and which was in effect eclipsed by the publication of the JEP report in September. They refer to the JEP by all but name in a second paragraph headed ‘Alternative Proposals’, and point out that a subsequent survey of employers indicated that employers are broadly willing to adopt the JEP recommendations. They then point out that they intend to run a new valuation, dated at 31 March 2018. The implications of this new valuation need then to be consulted upon, and they explain that this will then mean that any new payment arrangements which could be agreed will be too late to be implemented, and the first tranche of the emergency increase in employer and employee contributions will come into effect in April 2019. This will mean an increase in member contributions from 8% or salary to 8.8%, and an increase of employer contributions from 18% to 19.5%. We presume that any subsequent agreed change to contributions as a consequence of the March 2018 valuation and related consultation(s) will eventually factor in these default April 2019 increases.
A 2018 valuation as a means of facilitating the implementation of the JEP recommendations is a positive development. This is what was called for at the UCU conference earlier this year. With the strong asset growth since that overly-cautious and pessimistic 2017 valuation, alongside the JEP recommendations, it is even possible that the deficit is reduced significantly and that future-service costs fall. Indeed, the 22 November USS announcement implies that the valuation could mean that contributions could fall below the level set for April 2019, and this could even imply no detriment. (https://twitter.com/MikeOtsuka/status/1065908957900869632)
Our university has not yet updated their pensions page to offer the First Actuarial detailed response to the USS reply to the revelation that the deficit calculation had previously failed to factor in the value of the assets at year 20, and that if this had been done, using USS’s own statistics and metrics, there would be no risk of significant deficit at that point, if not a surplus. The FA response makes plain the nature of USS calculation weaknesses, and points out the factual errors in the USS response and their use of ‘alternative facts’. What is more, they call into question the governance structures of the USS. You can read it here: https://www.ucu.org.uk/media/9971/First-Actuarial-three-questions-on-the-valuation/pdf/firstactuarial-3questions_nov18.pdf
One sticking point that remains is that USS are still talking up the need for automatic triggers for higher contributions from employers, something that both UUK and UCU oppose and in opposition to JEP recommendation. Read more here from Michael Otsuka: https://medium.com/@mikeotsuka/automatic-trigger-warning-c98af35f6907