Dear colleagues,
The valuation of the Universities Superannuation Scheme (USS) pension fund is a major source of ongoing strife in the UK higher education sector. The USS’ lack of accountability to us, its members, has been the cause of several rounds of strikes.
Many thanks to the 3783 of you who added your name to the letter of complaint, which I sent to USS and have received an acknowledgement.[1] USS expect to get back to us by around the beginning of April.
The USS has now published their Section 76.1 report, which details the assumptions they are proposing to use for the 2020 valuation. If implemented these assumptions would require members to pay between 42.1% and 56.2% of their salaries to earn the same amount of benefits each year as currently, up from 30.7%.
As mentioned in the email, I would like to submit a letter to the FT on the USS's 2020 valuation, this follows our letter on the 2017 valuation[2] and governance at the USS in 2019 [3].
You can read the letter here:
https://docs.google.com/document/d/1DXrXABWkGZ2a7RUK5Q4SYm4q7Dig5dlq8vjWxjktfuw/edit?usp=sharingIf you are willing to be a signatory please add your details to the Google form below. Please add your details to the form, even if you have signed previous letters.
Finally, please do feel free to share this with anyone who may be interested. The more people who co-sign, the better.
I will finalise the list of signatories on Friday the 12th of March and send it to the FT.
All the best,
Neil Davies
[1] see here
https://uob-my.sharepoint.com/:b:/g/personal/ecnmd_bristol_ac_uk/EWZmtjMxZ25LspI2uF6qzjUB4oWrI4DtHq3eNcL6yDtbGQ?e=IvuErV[2]
https://www.ft.com/content/810aa034-9c79-11e7-8cd4-932067fbf946[3]
https://www.ft.com/content/ccb837a6-82ca-11e9-b592-5fe435b57a3b*****************************************************
Four years ago we raised serious concerns in the FT that the USS valuation methodology was underestimating likely investment returns and overestimating life expectancy and future pay increases. Since 2017, the USS’s assets have increased by 34%, exceeding their own forecasts by at least £17bn, mortality has been higher than expected, and increases in pay for university staff have fallen far short of the 4.4% per year anticipated by the USS.
For the 2020 valuation, the USS is proposing to further reduce the assumed rate of nominal returns from 2.8% per year to between 2.1% and 2.3% per year and to increase the assumed increase in life expectancy from 1.5% per year to 1.6% and 1.8% per year for women and men. The USS is now assuming the scheme will barely be able to match inflation in its investment returns over the next 30 years, whereas in reality, just since the valuation date at the end of March 2020, the scheme’s assets have increased by around a fifth to £80bn. If this valuation is approved, then to maintain current benefits, contributions would have to increase to between 42.1% and 56.2% of salaries from 30.7% today.
Since 2015, members’ satisfaction in the USS has collapsed from 68% to 24% in 2020. The USS needs to urgently restore members' trust, and if its valuations are to have any credibility it needs to start basing them on evidence, opening up the assumptions and methods that underpin them for full scrutiny. This is the only way to end the cycle of disputes over the scheme.
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