Statement of the eleventh meeting of the tripartite group

Summary Note – Meeting 11

 

The Tripartite Group continued its discussion around improving the effectiveness of the Joint Negotiating Committee (JNC).

 

The Group considered what each party felt ”good” would look like in relation to an effective and high-performing JNC. Views common to all three parties included operating with mutual trust, respect and openness and a clear recognition of roles and responsibilities.

 

The Group went on to consider the factors that currently hinder the effectiveness of the JNC, i.e. prevent it from operating with the features identified as characterising high performing. Issues identified included:

 

  • Issues are not dealt with in a timely fashion and/ or real engagement comes too late in the process;
  • Discussions are often adversarial and rarely collaborative
  • Parties do not always have the information they need
  • Roles and responsibilities may not well understood or can be conflated with other responsibilities.

 

It was agreed to provide these thoughts to the JNCEG to support their additional work diagnosing the factors that hinder the effectiveness (or otherwise) of the JNC. It was noted that the JNCEG would provide a report to the Tripartite Group shortly.

 

The Tripartite Group also received a presentation from UUK which summarized the final report from UUK on its consultation with USS employers on the recommendations of the JEP’s second report. This showed strong support for the JEP’s recommendations. Employers welcomed the proposal for a joint purpose statement, shared valuation principles and sustainability statement. There was also support for the JEP’s proposals around developing alternative paths to the valuation and using a dual discount rate methodology. Employers had also expressed a desire for a focus on value for money and a clear articulation of the trade-offs of risk and reward and how this would contribute to sustainability. There was support for the establishment of a valuation methodology discussion forum (which had already been set up by USS). There was also support for more flexibility for members to address the high level of opt outs from the Scheme. Mutuality was largely seen as being a positive feature of the Scheme.

 

It was agreed that the Tripartite Group would consider its future work programme at its next meeting in June.

Statement of the tenth meeting of the tripartite group

SUMMARY NOTE – MEETING 10

The Tripartite Group received a brief update on the valuation discussion document which had been issued by the Trustee.

The Tripartite Group considered the JNC Effectiveness Group’s (JNCEG) report. This report set out a number of options to improve the effectiveness of the JNC, including the pros and cons of those options. The starting point for this piece of work had been the JEP’s second report, but the JNCEG’s work was not constrained by the JEP’s report. The report set out options covering a wide range of issues relating to the current operation of the JNC and how that might be enhanced.

Following on from its consideration of the JNCEG’s report, the Tripartite Group held a discussion on the JNC’s effectiveness as a result of which a second piece of work was commissioned from the JNCEG.

This second piece of work asked the JNCEG to undertake a more in-depth piece of analysis to
diagnose the JNC’s effectiveness (or otherwise) and to consider the factors that have hindered its effectiveness. In other words, it asks the JNCEG to consider why the JNC is not operating effectively asight be desired. It was proposed that this assessment should take place against the three core functions of the JNC: acting as a check and balance to the Trustee in certain areas; rule changes; and deciding on contribution increases or decreases and/or benefit changes where the cost-sharing provisions are invoked following a valuation. The JNCEG was also asked to consider what “good” might look like in terms of a high-functioning JNC. This exercise would also be undertaken by the stakeholders and the Trustee for discussion at a future meeting.

Finally, it was agreed to seek dates for future meetings in June.

Statement of the ninth meeting of the tripartite group

In light of the government guidelines, the meeting took place via Video Conference.
The Tripartite Group received an update from USS regarding the work of the Valuation Methodology Discussion Forum which had continued to meet.

The Tripartite Group went on to consider the draft report from the JNC Effectiveness Group (JNCEG). This Group had been commissioned by the Tripartite Group to consider and set out options for how the JNC could be made to work more effectively. The JNCEG had been asked to take the JEP’s recommendations as its starting point, but not to be limited by these recommendations. The JNCEG had set out, as its emerging views, a set of options covering a range of issues relating to the operation of the JNC. These included: greater visibility of the USS Board of Directors; the Trustee’s Committee structure and valuation matters; a joint forum on valuation matters; improving the effectiveness of the JNC (which had a number of dimensions); a high-level steering committee on strategic issues; employer representation in USS; and member representation in USS.

The Tripartite Group held high level discussions on the JNCEG’s draft report. It was noted that a number of changes had already been implemented, such as Trustee Director attendance at JNC meetings and the creation of the VMDF. These had helped build understanding of the issues and had helped to build trust and confidence. Discussion took place around how these developments could be further enhanced. The Tripartite Group welcomed the JNCEG’s work and requested further work to be undertaken.

Statement of the eighth meeting of the tripartite group

In light of the emerging issues relating to COVID-19 it was agreed to shorten the meeting to enable stakeholders and the Trustee to respond to current issues.

The Tri-Partite Group agreed the final wording of the joint definition of sustainability. This is attached with this meeting summary, along with the Scheme Purpose Statements from the Stakeholders and the Trustee and the Shared Valuation Principles.

The Tri-Partite Group discussed the work of the Trustee’s Valuation Methodology Discussion Forum (VMDF), which had continued to meet, and the USS Discussion Document which had been published since the Tri-Partite Group had last met.

Stakeholders noted the publication of the Discussion Document by USS. A discussion took place on ensuring that the Discussion Document was as clear as possible. This would in turn ensure that Stakeholders (in particular, participating employers) could respond in as full a manner as possible to aid the Trustee’s deliberations. It was agreed to sat up a call with the Stakeholders’ actuarial advisers (AON and First Actuarial) and USS to discuss and clarify a number of technical issues relating to the Discussion Document.

The Tripartite Group learned that the JNC Effectiveness Group was making good progress and would be ready to present its initial views shortly.

The Tri-Partite Group received a report from UUK summarising the outcome of their consultation with members on the JEP report and matters relating to the 2020 valuation. Overall, the consultation had revealed strong support for the JEP’s recommendations. Areas of support included having a shared common Scheme purpose, the shared valuation principles and a dual discount approach to the valuation methodology. There was a strong support for the JEP’s recommendations around meeting the needs of members and a desire to explore options around contributions flexibility to address the high level of Scheme opt outs. There was a common view that issues needed to be dealt with in parallel to the current valuation cycle.
It was agreed that the next meeting would take place on 24 March. The final format of the meeting and content would remain under review in light of the current situation.

Statements of the sixth and seventh meetings of the tripartite group

Meeting 6

 

The Group received an update of the first meeting of the Valuation Methodology Discussion Forum (VMDF) which the Trustee had established to support and inform the development of the 2020 valuation. The VMDF comprised representatives from the two stakeholders and their advisers as well as representatives from USS, including Trustee Directors. The VMDF  had covered a lot of ground in its first meeting, including discussions on prudence and risk appetite. The Forum’s work would help inform the Trustee’s discussion document on the valuation which would be published in March. Both stakeholders and the Trustee agreed that the VMDF was a valuable forum. UCU and UUK said they thought the VMDF was looking more broadly and deeply at issues than was the case with previous groups and this was considered beneficial.

The Group discussed the JNC effectiveness workstream which it had commissioned. This workstream comprised representatives of the stakeholders and USS. It would hold a ‘kick off’ meeting on 18 February and would continue to meet with a view to providing an options paper for the Tri-partite Group in March, providing a short update in late February. The Tripartite Group expressed its thanks to all those who had volunteered their time to this workstream.

The Tri-partite Group continued its discussion on sustainability. It was agreed that sustainability was important for ensuring confidence in the Scheme. The Group agreed that sustainability in the context of a scheme like USS had many dimensions. But the group considered the dimensions to be most relevant for USS as: affordability, stability, clarity, adaptability, relevance and viability.

The Group started a discussion on rebuilding trust and confidence and the governance of the Scheme. Each party had set out areas which worked well, areas which worked less well and damaged trust and confidence and measures that could help restore trust and confidence. The Group agreed it would be helpful to continue this discussion at its next meeting.

Future meetings would receive feedback on the results of the employer consultation on the JEP report and the current issues under consideration. In addition, the Group would receive reports of the JNC effectiveness workstream and updates on the VMDF.

 

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Meeting 7

 

The Tri-Partite Group discussed the work of the Valuation Methodology Discussion Forum (VMDF) which had held three meetings. It was noted that the Trustee planned to issue a discussion document on the valuation methodology shortly. Stakeholders emphasized the need for the discussion document and the valuation process to be, and be seen, as collaborative – noting that it is the Trustee’s legal responsibility to set the assumptions. The importance of this document was recognized by all members of the Tri-partite Group.

The Group noted that the JNC effectiveness workstream had held a ‘kick-off’ meeting. This had been a positive meeting. Further meetings were being arranged in order that the workstream could produce an options paper for the Tri-Partite Group.

The Group continued its discussions on a agreeing a common definition of sustainability. It was agreed this should include a clear commitment to the fact that the Stakeholders and the Trustee wanted a sustainable scheme and to define what that means. The Tri-partite Group continued to refine the definition. It was agreed this should include the following features: affordability, stability, clarity, adaptability, relevance, and viability. It was agreed to review the statement further in order to clarify the positions of the Trustee and Stakeholders in the Scheme’s governance arrangements.

It was agreed to return to the question of trust, confidence and governance at a future meeting.

It was agreed that a report on the outcome of the UUK consultation exercise would be given at the next meeting.

Statement of the fifth meeting of the tripartite group

The Tripartite Group continued to hold productive discussions.

The Group noted the progress that had been made regarding the creation of the Valuation Methodology Discussion Forum which the Trustee had established to support and inform the development of the 2020 valuation. It was noted that this Forum would meet for the first time at the beginning of February. The Group also discussed progress with the development of the JNC reform work stream.

The group went on to further consider a definition of sustainability. All parties considered this to be an important concept in the operation of the Scheme and that it would be helpful if the parties could coalesce around a common definition and have greater clarity to build a common understanding. The group considered the core components of sustainability for a scheme such as USS. It was agreed that the group would return to the issue.

It was agreed that further consideration of the question of sustainability would be considered that the next meeting. It was also agreed that future meetings would consider how to rebuild trust and confidence. The group also agreed to hold a discussion on responsible investment, noting that this was an important issue for members.

Joanne Segars

Statement of the fourth meeting of the tripartite group

The Tripartite Group continued to hold productive discussions.

The Group considered and discussed the Valuation Methodology Discussion Forum which the Trustee had established to support and inform the development of the valuation. The establishment of this Discussion Forum was viewed as a positive development by Stakeholders. It was noted that the Discussion Forum would need to work at pace to ensure the valuation could be completed within the statutory time scale.

The Tripartite Group went on to continue its discussion on the creation of a Strategic Discussion Forum. The Purpose of the Discussion Forum would be to: consider longer term issues affecting the Scheme; build trust and confidence and to provide a forum for building common understanding; bring the parties together (though other bi-lateral discussions may still go on and be needed). It was not the role of the Strategic Discussion Forum to usurp the position of the JNC or function as a negotiating forum. USS would be regularly invited to the Forum to discuss areas of common interest and to support and enable discussions.  A summary of the Strategic Discussion Forum overview is attached.

The Group began to consider the JEP’s recommendations in relation to governance and the JNC.  It was agreed to ask a small group of representatives from each of the parties to produce an options paper which considered issues relating to the operation and effectiveness of the JNC, including their pros and cons.  The “Ask” for this workstream is attached.

The Tripartite Group reconfirmed that its role did not extend to consideration of benefit reform.

The Group received a helpful presentation from USS on scheme member opt outs and scheme demographics.

It was agreed that further consideration of the question of sustainability would be considered at the next meeting.

Joanne Segars

Strategic Discussion Forum – Overview

Summary of the Ask.

Statement of the third meeting of the tripartite group

The parties continued their discussions on the recommendations of the second JEP report. The discussions continued in a positive spirit, with UCU, UUK and USS each engaging actively in the process.

The tripartite group received a report of the discussion held the previous day at the USSL Trustee Board meeting concerning the 2020 valuation and the tripartite talks. It was reported that invitations had been issued to stakeholders to take part in the Valuation Methodology Discussion Forum. This Forum would consider the emerging findings from the Trustee’s review of the approach to the valuation methodology, including the issues raised by the JEP’s second report, e.g. the Dual Discount Rate. The Board welcomed the continuation of the tripartite discussions. The Stakeholders welcomed the increasing visibility of the Trustee Directors through the extension of the Valuation Methodology Discussion Forum to stakeholders as well as through work already underway, including greater Trustee interaction at JNC meetings.

The tripartite group went on to consider the matter of sustainability in light of the JEP’s recommendation that the parties should coalesce around a broad definition of sustainability which recognises the specificities of USS whilst also respecting regulatory requirements. The tripartite group had a useful discussion and agreed that there were a number of areas important to a definition of sustainability suitable for a scheme such as USS. It was agreed to return to this issue at a future meeting. It was hoped that this could then form part of the valuation discussions.

The group went on to begin to map out how, by whom and in what order the recommendations of the JEP relating to valuation governance should be considered. It was agreed that some of the JEP’s recommendations sat primarily with individual stakeholders – e.g. the recommendation relating to employer representation rested with UUK. The meeting considered the JEP’s proposal for a Strategic Group to consider issues relating to the future direction of the Scheme. It was recognised that it was not the role of such a group to usurp that of the JNC, but rather that it should take a longer-term perspective than the JNC. It was further recognised that such a group, which would sit outside the formal structures set out in the Trust Deed and Rules, could play an important role in building trust and understanding between the parties. There was a discussion about the role and involvement of the Trustee in the Strategic Group, and a recognition that the group should be led by the Stakeholders, but that the Trustee would be invited to participate. It was agreed to consider further the scope of the group further at the next meeting.

The tripartite group then discussed the JEP’s recommendations relating to the JNC. It was agreed that an options paper should be developed for the tripartite group to consider. Each party would contribute to the development of the options paper and this work would be led by representatives nominated by each party.

The next meeting of the tripartite group would consider: a report back on the progress in establishing the Valuation Methodology Discussion Forum; the development of the options paper relating to the JNC; and the Strategic Group. It was also agreed that USS would present its research on Scheme member opt outs. It was agreed that it would be helpful for the tripartite group to continue to meet through February and March.

Joanne Segars

Statement of the second meeting of the tripartite group

The parties held further constructive talks on a range of issues arising from the JEP2 report. It was agreed to publish a summary note of the first tripartite talks meeting which was subsequently published on the JEP website.

The parties held productive discussions, and made good progress, on developing a shared Scheme Purpose statement for the stakeholders to jointly agree and use. It was agreed it was important for the Stakeholders’ Scheme purpose statement and that currently used by the Trustee Company to fit together clearly. This would ensure that the different interests of the Trustee and the Stakeholders could be respected and recognised whilst also demonstrating a common interest and resolve.  The Stakeholders’ scheme purpose statement discussed at the tripartite talks is attached alongside the purpose statement of the USS Trustee.

Positive discussions were also held on Shared Valuation Principles, the purpose of which provides a basis for UCU, UUK and the Trustee will work together and approach future valuations. The shared valuation principles discussed at the tripartite talks are also attached.

It was agreed that the next meeting would consider the question of sustainability and start to map out how, and by whom, possible governance  changes might be addressed. It was also agreed the group would receive a report back from the USSL Board meeting which was due to meet on 22 January to consider, amongst other things, the JEP2 report and the tripartite talks.

Joanne Segars

Statements of purpose and shared valuation principles

Statement of the first meeting of the tripartite group

The tripartite group held a productive first meeting. Each body (UCU, UUK and USS) expressed their commitment to a collective dialogue. There was an agreement to reach a better understanding and to have a full discussion on the recommendations of the JEP2 report, recognising substantial alignment of interests.

There was a willingness to discuss all of the issues and recommendations. There was a recognition that some of the recommendations fall more naturally to one or to some parties than to all. But there was also a recognition that some of them will require a genuinely collective discussion.

It was agreed that the next meeting would consider a Scheme Purpose Statement and the Shared Valuation Principles.

Joanne Segars
Chair, Joint Expert Panel