The pensions deficit of the Universities Superannuation Scheme (USS) has more than halved from £7.5bn to £3.6bn, its new technical provisions consultation has revealed.
In its updated 2018 technical provisions update published today, 4 January, USS said that changes to realised asset return, mortality rates and expected investment returns helped reduce the deficit.
The updated 2018 figures are an attempt to overturn the 2017 valuation, after an independent panel deemed the it “flawed”, also criticising Universities UK and The Pensions Regulator.
Following the updated figures, USS have proposed a contribution rise of 28.7 per cent, made up of combined employer and employee contributions, down from the 36.6 per cent proposed under the 2017 valuation.
Deficit recovery contributions of 5 per cent would also be required.
Furthermore, changes including increasing the reliance at 20 years above £10bn in real terms, deferring the de-risking process, smoothing contributions over future valuation cycles and allowing for outperformance would “all fall outside the trustee’s risk appetite”.
Despite this, USS added that with appropriate level of contingent support, a contribution rate below 30 per cent could be acceptable.
Commenting on the update, Universities and College Union (UCU) head of policy and campaigns, Matt Waddup, said: “As we move towards a fresh valuation, UCU’s priority remains to protect our members’ hard earned pension benefits.
"We will be engaging fully with employers and USS to seek the full implementation of the Joint Expert Panel report and will be closely following discussions around proposed contingency measures.”
The consultation, formerly launched on 2 January, will run until 28 February 2019.