An update on USS
As you may know, a deadline of 18th December has been set for the negotiations and discussions around Universities Superannuation Scheme (USS). This deadline has been set to ensure the Trustees can finalise their valuation by the due date of 30 June 2018. I am concerned that there is insufficient information available to us for us to form a view on possible options. We need to find a way for the two sides to come more closely together. In that light, I have today written to UUK to ask for some urgent modelling on different salary thresholds for future defined benefit accruals and the contribution rates they would require as well as the sensitivity of these models to key assumptions.
Pension valuations are very complex and there are significant interdependencies so it is difficult to reduce them down to simple models and preserve accuracy. However this modelling should provide indicative results of what might be possible.
I think it is important that we move away from the proposals for a zero threshold for the defined benefit scheme and consider more realistic thresholds and their associated contribution rates quickly before time runs out.
Although I am proposing the urgent modelling of different salary thresholds with the aim of securing a breakthrough before the 18th December deadline, this work should not preclude the continuing exploration of the possibility of obtaining government backing for the pension scheme in the future and the possible benefits that might bring. As I have said before a government backed scheme becomes an asset for the government, but would provide vital underpinning for the scheme’s members.
I will continue to keep you informed on progress.