The Universities Superannuation Scheme (USS) is to conduct another review of its funding position after protests by thousands of members who were told their benefits were unaffordable.
The USS carried out a funding valuation less than a year ago and found a £7.5bn gap in its finances, which sparked the protests.
Its new funding review will be a valuation of the DB schemes’ funding position as of 31 March 2018.
Around two months ago, an independent panel deemed that USS’s 2017 review was flawed and was also critical of The Pensions Regulator and University UK’s (UUK) roles.
The USS will again work with UUK to update information for its 2018 valuation, as its statement detailed: “We’ll work through this in the next few weeks and will formally consult UUK (on behalf of employers) on our updated funding assumptions over December and January.”
Additionally, the joint expert panel found that the scheme was in a better financial position than expected and set out a list of recommended changes to the review.
The USS’s statement said that employers indicated that they were willing take these proposals into account, including paying higher contributions: “UUK consulted employers on the stakeholder panel’s proposals and subsequently announced that employers are willing to support them, subject to us providing more information on the additional financial risks involved – and if and how they could be managed, and mitigated.”
However, the USS also warned of the potential consequences of these proposed changes: “The panel’s proposals would require employers to take on greater risk, and both members and employers paying higher contributions, than we were advised they were originally willing to support.”
Updated contribution rates based on the new valuation are expected to be finalised in “early February”, although the USS has said that it will be unable to avoid the proposed contribution increase in April 2019.
Despite this, it hopes to find an “alternative way forward” before the higher cost-sharing increases come into effect in October 2019.
USS Group CEO, Bill Galvin concluded: "Where there is a will on all sides, a 2018 valuation could be completed before the higher phases of cost-sharing come into effect from next October.
"The trustee’s objective will remain the same throughout this process: to ensure that the defined pension benefits USS members earn can be paid as they fall due.”