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.

An update from the chair

The Panel would like to reiterate its latest call for evidence and reassure all stakeholders that the Panel is on track to publish its second report in September 2019.

The Panel thanks all those who have contributed so far and calls for evidence to aid the second part of this phase of its work.

This call for evidence focuses on:

  1. potential principles that could underpin future valuations and support the scheme’s sustainability;
  2. alternative paths to the valuation; and
  3. questions of how risk is shared in the scheme, including approaches to contributions and mutuality.

You can find the call for evidence here.

If you still wish to submit evidence in response to the Panel’s first call for evidence, which looked at the valuation process and governance arrangements, please feel free to do so. Please ensure that submissions reach us by the deadline below.

Please submit your comments to: submit@ussjep.org.uk by June 14 2019.

Joanne Segars OBE

Further phase two meetings of the Joint Expert Panel

29 April and 2 May 2019

The Joint Expert Panel held its sixth and seventh meetings of their Phase 2 work. The Panel considered feedback on a series of interviews with a range of stakeholders involved in the valuation and governance process to better inform their findings.

The Panel held an evidence session with the Pensions Regulator to discuss the valuation process and the conclusions of the first report of the Panel. The discussion considered the current regulatory framework within which the valuations take place.

The Panel held a further evidence session with representatives of the Chairs of University Council (CUC) on issues relating to the valuation process. This session was helpful in aiding the panel’s understanding of the valuation process from the institutions’ perspective.

Over the course of both meetings the Panel have considered possible principles that could underpin future valuations and the question of scheme sustainability.

Taking into account their terms of reference and the evidence received to date, the panel discussed the second call for evidence. As always, the panel is keen to hear from a wide range of stakeholders with an interest in the scheme.

Earlier in the year the panel issued a call for evidence which focused on the valuation process and its governance. The panel is grateful for the responses received.

The panel is now issuing a further call for evidence to aid the second part of this phase of its work. This call for evidence focuses on:

  1. potential principles that could underpin future valuations and support the scheme’s sustainability;
  2. alternative paths to the valuation; and
  3. questions of how risk is shared in the scheme, including approaches to contributions and mutuality.

You can find the call for evidence here.

Please submit your comments to: submit@ussjep.org.uk by June 14 2019.

Second call for submissions

The Joint Expert Panel on the Universities Superannuation Scheme (USS) is continuing its second phase of work on the USS valuation.

The first part of our work has focused on the valuation process and its governance. It included a consideration of the roles and involvement of UCU and UUK in the valuation process so that a more collaborative process can be adopted for future valuations; the interaction of bodies with a formal role in the valuation, including the Trustee and JNC; and considering the potential for the involvement of Scheme members in the valuation process and how more effective engagement with employers can be achieved.

The Panel issued a call for evidence on these issues in February and which closed in March. We are very grateful for the responses received which have been considered by the Panel.

The Panel is now focused on the second part of it work. This considers how the long-term sustainability of the Scheme can be secured. It includes:

  1. Developing an approach to future valuations that is clear (and clearly understood by stakeholders) and which can deliver both a sustainable scheme and a shared set of principles.
  2. An exploration of different paths to the valuation of technical provisions and other aspects of the valuation methodology, including Test 1.
  3. Considering questions of risk sharing, including adopting a different approach to contributions (which could, in turn address issues of intergenerational fairness and equality); examining further the question of mutuality and the question of employer appetite for risk; and the potential for risk sharing.

We are particularly interested in hearing views and evidence on principles that could be adopted by the stakeholders and that could underpin an approach to future valuations; issues relating to supporting the long-term sustainability of the scheme; and approaches to the valuation methodology. You should feel free to respond to all three parts of the call for evidence or any one part

Submissions on the above matters or comments for the attention of the Panel are warmly welcomed and should be sent by 14 June 2019 to submit@ussjep.org.uk

We look forward to hearing from you.

Second and third phase two meetings

The Joint Expert Panel held its second and third meetings of phase two of their work recently. The panel considered updates on the 2018 valuation from stakeholders UCU and UUK.

The first part of phase two is focussing on governance issues relating to the valuation process. The chair has conducted a number of structured interviews with a range of stakeholders to inform the panel’s discussions.

An evidence session was held with Professor Gordon L. Clark. Professor Clark has been an elected member of the Oxford University’s Socially Responsible Investment Committee, is an employer-nominated trustee of the Oxford Staff Pension Scheme, is a Founding Governor of the UK Pension Policy Institute, and advised The Kay Review on Equity Markets and Long-Term Decision Making. He is currently advising the Australian Fraser Review of pension fund governance.

A further evidence session was held with Rory Murphy Chair of MNOPF Trustees Limited and Andrew Waring CEO of MNOPF Trustees Limited and Ensign. MNOPF is the multi-employer defined benefit pension scheme set up for officers of the British Merchant Navy, now closed to new members and future accrual but with joint employer and union governance arrangements. A range of issues were covered including the importance of stakeholder confidence in the process, ongoing valuation checks and the relationship with The Pensions Regulator.

The panel were also informed by a considered range of submissions from across the sector and outwith on this question. The panel thanks all those who took the time to submit and will be informed by the detail provided by written submissions and the evidence sessions in reaching their conclusions. Members, employers and interested third parties have all contributed and the panel places on record their thanks for the richness in submissions.

Further interviews will be held with USS as the panel move into planning the next phase of their work looking at how the long-term sustainability of the scheme can be secured within the terms of reference agreed for the Joint Expert Panel.

JEP action points

The Joint Expert Panel (JEP) held its first meeting on 4th February to discuss phase two of its work.

This will be divided into two interlinking parts, the first of which will look at the valuation process and governance. The second part of the Panel’s work which, will start later in the year, will consider how the long-term sustainability of the Scheme might be secured through the development of a shared set of principles and will revisit the valuation of technical provisions and other aspects of the valuation methodology, including Test 1.

UCU nominated Bryn Davies joined the Panel to replace Catherine Donnelly for this phase who has stood down for personal reasons. The Panel expressed their thanks for all her work in phase one.

The Panel heard from John Chilman, Chair, Railways Pension Trustee Company Limited, to explore issues relating to the valuation process, governance and interaction with external actors in a large scale, multi-employer, open defined benefit pension scheme.