Welcome by the Chair

Guaranteed pension benefits, like those offered by USS, are now rare in the private sector, due to the significant increase in costs and risk that are entailed in funding them. The ability of universities to underwrite such guarantees with their future cash flows and balance sheets is a key issue for the higher education sector.

In the recent debate of these issues, differing views have been given on the health of USS and the performance of the trustee. Often the lines around accounting rules, pension funding and legislation were blurred. The trustee is responsible for ensuring that pensions promised will be paid when due, and benefits yet to be earned will be secure. Because of this, the trustee board has to have a high degree of confidence that the scheme can do that.

Uncertainty continues to be our single greatest challenge. No one can predict the future, but with Brexit, the slow recovery from the financial crisis and our aging society, the price of delivering certainty in the world of pensions has changed significantly over the past decade. In 2017/18, we had to consider carefully how much weight to give to the impact of these issues on the scheme’s funding position. In doing so, we have engaged in complex and challenging consultations with stakeholders. The path we must now follow to complete the 2017 valuation – as required by law and set out in the scheme rules – is being given our full attention.

Against this backdrop, I am pleased to present a report that shows why members can continue to have confidence in the scheme and its ability to deliver value for money and high performance. The USS Retirement Income Builder has outperformed its investment benchmark in the year under review and we can also celebrate the strong performance of the USS Investment Builder in its first full year of existence. You can view my DC chair’s statement on the USS Investment Builder in the full report and accounts document.

The USS Investment Builder was designed around the needs of our members, based on extensive research, and drawing upon industry best practice. It shows that USS provides a bespoke pension plan; tailored to employers’ and members’ needs and driven by their feedback.

The broad and challenging agenda before us means it has never been so important to have a strong and capable trustee board. I am very grateful that we have on the board some of the most insightful and well-regarded individuals in both the pensions and higher education sectors – we have leant on that expertise very considerably this year, and will continue to do so for the best possible solution to the challenges we face, for our members.

The trustee board has assisted USS to continue to deliver value for money, strong investment returns and member focussed services. All of these strengths will be called upon in a turbulent economic and political climate, and as our member and employer representatives continue to discuss the future shape of the scheme. As ever, we stand ready and willing to contribute to that discussion and to the development of your scheme into the future.

Professor Sir David Eastwood - Chair

Professor Sir David Eastwood Professor Sir David Eastwood


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