Consultation on the 2018 valuation

USS have launched a consultation on the 2018 valuation. The consultation will seek to assess the impact and applicability of the recommendations from the Joint Expert Panel (JEP) report which we supportWe will need to review and respond by 25 February 2019. We will hold meetings with Faculty Boards and Management Committees and Heads of Department, as well as with UCU representatives, and you can also submit comments directly to us at any time. Your views will contribute to a final response decided at our February Provost’s Board meeting. 

Consultation on the 2017 valuation

In the absence of any new proposals from the Joint Negotiating Committee (JNC), the USS trustee said in December 2017 that to fulfil its statutory obligations the ‘cost-sharing’ rule will take effect in parallel to the work of the Joint Expert Panel (JEP).

Consultation with employers

On 5 December 2018 the USS launched a consultation on the final steps for concluding the 2017 valuation. The following College response was sent to Universities UK (the employers’ representative body for these purposes) on 11 January 2019:

In responding to the consultation we would like to make two specific points and a more general point:

  1. Recovery Plan – The draft indicates that deficit contributions of 6% will be required for the 17 year period from 31 March 2017.  We do not believe we have seen sufficient evidence to justify this increase as part of the consultation on the 2017 valuation.  We note the advice from Aon that recovery plan assumptions only need to be ‘appropriate’ and not ‘prudent’ and we support the recommendation in the JEP Report that we should be consistent with the 2014 valuation approach and continue to include asset outperformance.   
  1. Other employer contributions – We are concerned about the wording in the Schedule of Contributions that suggests the Trustee can simplify notify the employers that further contributions are required that are not set out in the Trust Deed.  We assume this is only after appropriate consultation but would appreciate clarification on this point and would ideally recommend the wording should be removed.

The more general point we would like to make is around the perceived risk of creating a ‘backstop’ by concluding the 2017 valuation.  We understand why this needs to be done, but would like to re-iterate the financial impact this would have if it was ever called upon and the reputational damage it might cause if it gave the impression that the good work done by the JEP had not been followed through.   We are keen to ensure that the JEP continues to its next phase of work as soon as possible and urge the trustee to take this into consideration.

Consultation with members

USS consulted members on proposed changes under the ‘cost-sharing’ rule, which would see a phased increase to both member and employer contributions beginning in April 2019.

We have created a modeller so that you can enter your own salary and see the potential impact of the proposed changes. Access the modeller (log in required).

More information for active members and staff who are eligible to join the scheme is available on the USS consultation website.

The consultation ran for 60 days, closing on Friday 2 November 2018.

The proposed changes would see:

  • The 1% employer match discontinued
  • Employers’ contributions to the USS Investment Builder on salary above the threshold to remain at 12%
  • An increase in contributions from both employers and members on a 65:35 cost-sharing basis.

This increase would be on a phased basis:

 From 1 April 2019From 1 October 2019From 1 April 2020
 Member rate  8.8%  10.4%  11.7%
 Employer rate  19.5%  22.5%   24.9%
Source: USS members update
Summary of the table's contents