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Panel of independent experts to review processes for arriving at pension deficit

18 March 2018

Universities UK is announcing today that it is to establish a panel of independent experts to review the processes behind the valuation that put the Universities Superannuation Scheme (USS) deficit at £6.1 billion.

 

The idea of establishing an expert panel was agreed with the University and College Union (UCU) at this week's ACAS talks to inform future valuations, but is now being introduced immediately to address concerns over the current valuation. UCU will be invited to play a full role in providing evidence to the panel.

The panel will consider issues of methodology, assumptions and monitoring, aiming to promote greater transparency and understanding of the USS valuation. It will have an independent chair, involve academics and pension professionals, and will liaise with both USS and the Pensions Regulator.

The terms of reference and panel composition will be announced shortly, and the panel will be asked to report back as soon as possible.

The establishment of the panel will not impact on the legal requirement for USS to submit a plan to put the scheme on sustainable footing to the Pensions Regulator by 30 June 2018. Furthermore, it won't prevent both sides reaching a resolution ahead of the summer exam period, during which time UCU is proposing further strike action.

Alistair Jarvis, Chief Executive of Universities UK said: "Concerns have been raised over the way the scheme has been valued, which has led some to question whether there is, in fact, a very large deficit. This panel of independent experts will consider issues of methodology, assumptions and monitoring, aiming to create more transparency and understanding of how the scheme is valued.  I hope it will give assurance that the valuation undertaken by USS has been robust, and boost public confidence in the process.

"The Pensions Regulator has imposed a clear, legal deadline for a plan to be in place to tackle the scheme's financial challenges. We have proposed changes only because they are necessary.

"Both sides must work urgently to avoid the dispute impacting on the exam period. In the interests of our students, I hope we can now reach a speedy resolution. Students are caught in the middle of this dispute through no fault of their own."

ENDS​

Notes

  1. Universities UK is representing the views of more than 350 higher education employers on USS reform proposals.
  1. Talks between Universities UK and UCU began at Acas on Monday 5 March 2018, following discussions that started in January 2017. An agreement was reached on Monday 12 March between Universities UK (UUK) and UCU on proposals under the auspices of Acas following six days of talks. These proposals were, however, rejected by UCU on Tuesday 13 March after it consulted its branches.
  1. The proposal jointly developed with UCU negotiators at Acas would ensure that more than 50% of USS members retain full defined benefits (DB).
  1. Employers have been consulted for their views on the proposals agreed at Acas. This has shown strong support from universities for the proposals. It is also clear that the agreed increase in employer contributions from 18% up to 19.3% would mean difficult choices over where the extra money comes from. For many universities, moving substantially more money to pay pensions will hit teaching budgets hard and put jobs at risk.
  1. The transitional arrangement, agreed at Acas, would take effect from 1 April 2019, lasting for 3 years. To achieve this interim solution, both employers and members would be required to pay higher contributions. This would include a total employer contribution of 19.3% of salaries and a total member contribution of 8.7%. These increased contributions would only be in place for the duration of the 3-year transitional arrangement.​
  1. USS is governed by a clear set of scheme rules. The Joint Negotiating Committee decided upon benefit reform changes on 23 January 2018. The JNC brings together an equal number of representatives from Universities UK and the University and College Union. The JNC has an independent chair who oversees discussions between employer and member representatives, and can choose to cast a deciding vote if agreement between both parties cannot be reached.​​

Key Contacts

Gareth Morgan

Gareth Morgan

Media Relations Manager
Universities UK

Clara Plackett

Clara Plackett

Senior Press and Social Media Officer
Universities UK

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