Second report of the Joint Expert Panel

The second report of the Joint Expert Panel (JEP) is published today (13 December).

The Panel was set up by UCU and UUK following the 2018 industrial dispute over the USS pension fund. The Panel comprises senior figures from the pensions sector as well as academic experts from within higher education and is chaired by Joanne Segars OBE.

Following its first report into the 2017 USS valuation, the Panel was commissioned by UCU and UUK to produce a further report aimed at establishing “key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund”.

The Panel’s report makes a series of interlocking recommendations covering the governance of the Scheme, the valuation methodology and the way forward including:

  • the establishment of a new, jointly agreed purpose statement and shared valuation principles;
  • creation of a series of joint bodies within USS including a valuation forum and a high-level joint union/employer steering committee to agree issues relating to the future direction of the Scheme;
  • improvements to the operation of the Joint Negotiating Committee which comprises UCU and UUK representatives.
  • agreement to a more appropriate valuation methodology driven by the agreed purpose of the scheme and a re-articulation of the Trustee’s, employers’ and employees’ risk appetites;
  • the adoption of a dual discount rate approach to the USS valuation which would distinguish between past and future service, better reflect the demographics of the Scheme and automatically evolve as the Scheme matures; and
  • investigation of different approaches to contributions in order to address the high level of Scheme opt outs among younger and lower paid staff.

The Panel considered a great deal of evidence on the sharing of the USS risk across the sector and wishes to affirm its belief that the mutuality of the scheme remains a great strength and that moving away from this could damage its future.

The Panel has set out a road map for the parties to work jointly towards implementing its recommendations and believes that a failure to urgently address the issues raised in this report would be a disaster for members, employers and the sector. The Panel therefore proposes that the Stakeholders and Trustee come together in a facilitated process.

Joanne Segars, chair of the JEP said:

“Our recommendations, which should be considered as a package, are rooted in the belief that the USS is of crucial importance to members, employers and to the health of the higher education sector. We propose significant changes to governance and valuation methodology, each of which may be difficult for individual parties to accept. However, as work on the 2020 valuation commences, employers, unions and the Trustee must urgently come together through a facilitated process to make them work.

“The JEP does not underestimate this task, but we believe that it would be failure for Scheme members, sponsoring employers and the sector if our recommendations are not seriously considered”.

Notes:

  1. The Panel’s members are: Joanne Segars OBE (Independent Chair), Ronnie Bowie (appointed by UUK), Sally Bridgeland (appointed by UUK), Chris Curry (appointed by UUK), Bryn Davies (appointed by UCU), Saul Jacka (appointed by UCU), Deborah Mabbett (appointed by UCU). Biographies are here
  2. The Panel’s purpose, as set out in the terms of reference, was to establishing “key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund”.

 

For further information: chair@ussjep.org.uk

UCU can be contacted at press@ucu.org.uk

UUK can be contacted at pressoffice@universitiesuk.ac.uk

The report of the Joint Expert Panel (PDF)

Additional research into Member Voice (PDF)

Meeting of the Joint Expert Panel: 26 November 2019

The Panel are finalising their second report and are confident of publishing soon. The Panel wishes to thank all those who have contributed to their work. This has been invaluable as has developed its thoughts, the wider understanding and appreciation of the views of stakeholders.

The Panel discussed and reviewed the draft report and its core recommendations.

Meeting of the Joint Expert Panel: 31 October 2019

The Panel explored further analysis on possible alternative paths to the valuation and wider considerations of sustainability of the Scheme.

The drafting process and testing of conclusions is in the final stages and should complete their  work by the end of the year.

Update on second report

The JEP was originally aiming to provide its second report in September 2019. However the Panel is still working and considering evidence and is not yet in a position to report. With the agreement of UCU and UUK the report will therefore be published later this year.

The Panel hopes that its recommendations, once published, will have a positive influence on all stakeholders and we will communicate further once we are ready to issue our report.

Meeting of the Joint Expert Panel: 24 September 2019

The Panel heard further evidence from the USS Trustee and Executive on their approach to the next valuation and their approach to stakeholders and process.

The Panel continued their work on examining evidence relating to alternative pathways to the valuation including the implications of proposed regulatory changes by Government.

In addition to this work the Panel considered the intersection of this work with the complex picture of membership profile within the sector.

Meeting of the Joint Expert Panel: 4 September 2019

The Panel recognised that due to the remaining evidence to consider on alternative paths to the valuation that the report would not be completed by the end of September as hoped for. The Panel acknowledged this to both sponsoring stakeholders with regret.

The Panel heard evidence from PwC in their role as advisors to the scheme on the strength of the covenant. The situation involving the departure of a single sponsoring employer from the scheme with large assets prompted a range of questions for the Panel to consider in their earlier discussions on scheme governance and the mutual nature of the Scheme.

The Panel wish to thank the Trustee for agreeing to share the advice of the scheme advisors and their contribution to their evidence base.

Meeting of the Joint Expert Panel: 23 August 2019

The Panel considered further written evidence from the Trustee around risk appetite and approach to the valuation and the extent to which there is a shared understanding between the interested parties. The Panel considered the evidence gathered to provide a route to this goal.

The Panel has received evidence on the implications of potential new legislation and will consider all possibilities within the legislative framework as it develops including the proposed long-term funding target.

The results of the commissioned qualitative member research was presented to the Panel and they look forward to including this in their final report as it enriches the evidence gathered from interviews with all parties.

The remaining meetings of the Panel will consider their report and remain of the view that the substantive work will be completed on schedule by the autumn.

Meeting of the Joint Expert Panel: 1 August 2019

The Panel considered updates on the 2018 valuation and a rule change relating to the conditions by which a scheme employer could leave the scheme. In addition the Panel reviewed the latest round of structured interviews with stakeholders.

This meeting received an initial top line report from Ignition House on the findings from focus groups with Scheme members. The final report will be considered at the Panel’s next meeting.

This project has facilitated a wider consideration of the views of Scheme members.

The Panel reviewed the structure of contribution rates in other Schemes with an interest in HE.

The Panel has also received access to a further range of papers from the Trustee and extends their thanks to the trustee for their assistance in understanding better the decisions taken so far.

Meeting of the Joint Expert Panel: 1 & 10 July 2019

The Panel has considered recent developments in the Scheme, including the impact of rule changes relating to the withdrawal of sponsoring employers and the strength of the covenant.

A number of late submissions were shared with the Panel and continue to inform their understanding of the range of views on governance, sustainability and alternative paths to the valuation. As part of this work the Panel held evidence First Actuarial and AON, actuarial advisers to UCU and UUK respectively.

In between meetings a series of interviews have been held with members of the Trustee board.

The Panel held evidence sessions with The Pensions Regulator. TPR covered a range of issues to describe their approach to regulation and clarify their approach to the Scheme with regards to governance and long term sustainability. The Panel are grateful for their time and assisting the continued work of the Panel.

USS Executive and the Scheme Actuary met with the Panel to discuss the governance of the scheme and long term sustainability.

Recent meetings have considered a range of written and verbal evidence on:
• Developing an approach to future valuations that is clear (and clearly understood by, and holds the confidence of, all stakeholders) and which can deliver both a sustainable scheme and a shared set of principles.
• different paths to the valuation of technical provisions and other aspects of the valuation methodology, including Test 1
• questions of risk sharing and the provision of suitable future pensions in line with the Panel’s TOR.

Meeting of the Joint Expert Panel: 24 June 2019

The Panel considered updates from stakeholders on recent developments with regards to USS and the 2018 valuation.

The Panel also received feedback on interviews conducted with stakeholders and USS.

The Panel wishes to thank all individuals and organisations who submitted evidence. Responses covered a wide range of issues including: alternative models for the sustainability of the scheme; mutuality; and consideration of the impact of proposed scheme rule changes relating to the departure of a sponsoring employer from the Scheme.

The Panel have commissioned qualitative member research to enrich to the existing evidence base.