Brilliant Report on USS BY First Actuarial
As part of the negotiations about the future of the USS pension scheme, the UCU commissioned First Actuarial to comment on the assumptions being made by the Trustees which have been criticised for being excessively prudent and pessimistic. The paper provides detailed estimates based on a different methodology that assumes the university pension scheme will continue into the indefinite future (since it applies to a whole sector of the economy) rather than being prepared for closure. It also shows that the trustees' approach creates a vicious circle of self-fulfilling pessimistic assumptions.
The report is highly recommended as a carefully argued, forensically detailed demolition of the trustees' case. The paper shows that if the scheme is viewed on an ongoing basis - having a very long or infinite time horizon - and where the chance of the institutions failing to support the scheme is very small - then there is no deficit or at most a very small one that does not necessitate the kind of radical changes being proposed.
The report is quite technical in places requiring a good grasp of the arguments and jargon. But its main message is easy to take away. The report raises a number of questions for the USS officials and the trustees to answer in order to give a fuller picture.
The FA report is here:
ucu_usstrusteeconsultationresponse_nov14.pdf
The UUK consultation document to which it refers is here:
2014_actuarial_valuation_technical_provisions_consultation_paper.pdf:
Dennis Leech
04 Dec 2014 10:30
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Tags: Pensions Uss;
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Michael Otsuka
I’ve just written up a five-page note on this report, called “How to value a pension fund for an ongoing pre-92 higher education sector that is not about to become insolvent”. It begins:
“UCU commissioned First Actuarial to compile a 43-page response to the USS consultation on the Actual Valuation (AV). ‘UCU/FA’, as I shall refer to this response, is a significant and well-argued statement that sheds light, not just on the current USS valuation, but also more generally on large multi-employer pension schemes for schools, universities, and other institutions that are an enduring part of society. Here is a note on this document, which I hope will be accessible even to those unfamiliar with the technicalities of a pension fund valuation.”
Here’s a link to the note: https://drive.google.com/file/d/0B7G5ZYL-S4zDR2tLSlZDZG4zd2s/view?usp=sharing
06 Dec 2014, 14:13
Michael Otsuka
Here’s a link to a slightly tidied up version of the note that I posted above: https://drive.google.com/file/d/0B7G5ZYL-S4zDdll3VS1jTEl2Mk0/view?usp=sharing
07 Dec 2014, 05:49
Michael Otsuka
Here linked is the note I posted above, with a bit more tidying up: https://drive.google.com/file/d/0B7G5ZYL-S4zDRjI3VHhMakwxMU0/view
08 Dec 2014, 11:05
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