- The commitment of USS employers to a mutual and enduring underwriting of the security of the very valuable pensions they promise to our members is a critical factor affecting the cost of funding them, especially at a time of such uncertainty for the global economy.
- USS members are promised a (largely inflation-protected) income for life in retirement, regardless of what happens to the economy – a valuable and increasingly expensive promise to make in a world of record-low interest rates, volatile markets, and slower growth.
- The 2018 valuation assumed employers would make additional commitments to strengthen the covenant. These measures – a long-term rule change about employers exiting the scheme, and agreements not to give priority to other lenders over USS – are still to be put in place. They are the most urgent issues to address in determining the outcome of the 2020 valuation.
A USS spokesperson said: “We recognise the extreme difficulties UUK face in building a consensus across 340 disparate employers, particularly in securing a uniform and long-term commitment to USS.
“Equally, they must appreciate the difficult position in which their response places the Trustee: after 18 months of deliberations, their suggestions for key covenant support measures fall considerably short of the commitments required.
“We will need to work with UUK urgently to see if we can find a way forward on this critical issue. As we have repeatedly made clear over the past year and a half, it is fundamental to the valuation and the uncertainty surrounding it explains why a range of outcomes was illustrated for our consultation.
“As it stands, UUK’s position on supporting the scheme is likely to result in contributions that are unaffordable for employers and members. The Trustee hopes they will reconsider this position.
“Ultimately, the options for mitigating the rising cost of funding the scheme’s benefits sit with UUK and the Joint Negotiating Committee, who design the scheme. The Trustee’s role is to administer those decisions, and to ensure promises made are secure.
“We are committed to striving for the best outcome possible in incredibly challenging circumstances.”