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A blog in which I argue for the importance of acceptance in full by union and employer of the proposals of the Joint Expert Panel on #USS. Further remarks below on the graphed 65%-35% employer member split of contribution increases. 1/
Some have questioned my claim that the 65%-35% employer-member split of the 3.2% contribution increase graphed above in the righthand column of Figure 10 of the report is among the JEP's proposals. 1/
Whether or not JEP ‘proposes’ this, they are offering a clear steer in the direction of a 65%-35% split. The JEP chair also says the following in the introduction: 2/
Read 13 tweets
There's a bonanza of new FOI responses that give us a much better sense of the range of university responses to #UUK #USS consultations from Oct 2016 and Feb/March 2017. Picking through them it's fascinating to see which universities challenged the direction of travel 1/
e.g. Aberdeen: "Aon ... & UCU have indicated that it may be advantageous to consider other models. We are interested in the Trustees views as to whether there are alternative models that could result in a more considered outcome"… cc @aberdeen_ucu 2/
e.g. LSE: "We note that the latest benefit changes were implemented less than 12 months ago. The School’s view is that it is too soon for further changes to be made."… 3/
Read 6 tweets
2. #JEP has a lot to say about Test 1. Its sentence 'The view of the Panel is that Test 1 is not well understood outside of USS' is ... well ... certainly marvellously diplomatic.

Cf. and 6/
3. #JEP's discussion of #USS's & #UUK's 'differing perspectives' on the shift from Sept to Nov valuation shows just how murky the deliberations that resulted in this shift still are.

This remains a big issue, given #JEP proposal to reassess employers' atttude to risk (p. 45) 7/ Extract from p. 45 of JEP report
4. #JEP agrees w many of us that UUK's 'framing' of questions around risk in their consultations has serious consequences.

How can we be confident that any future assessment of employers' risk appetite by UUK shows an improvement in their use of social scientific methods? 🧐 8/
Read 13 tweets
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After a few weeks away from Twitter, I'm back to think – alongside many others – about content & rhetoric of the #JEP.

And abt what we at @USSbriefs have been doing all summer w @OpenUPP2018 to encourage deliberations over #USS valuation to take place in public #USSstrike 1/
Many (incl. @NJSHardy @gailfdavies @DrJoGrady @etymologic @MikeOtsuka) have already provided cogent analyses of the #JEP report & its implications. So here I'll just going to pick out some of what has struck me most forcefully on a first read. #USSstrike 2/
1. There's a judicious use of rhetoric – particularly around 'confidence', '(mis)understanding' & 'communication'. This cleaves closely to that used by #UUK & Bill Galvin – whether that is deliberately so as to increase likelihood of acceptance by those parties, you can decide 3/
Read 5 tweets
So, yesterday the Joint Expert Panel offered its first report on the #USS pension valuation. Here is an attempts at a ‘plain English’ account of what it says.
The history of the dispute up to the point at which the JEP was established is explained in a lengthy but plain English account here:…
The JEP report itself is written in very understandable way, and it is full with helpful appendices and clarifications. Nonetheless, my summary here is intended for those who feel overwhelmed by the detail of the history of the dispute, the various technical terms and so on
Read 32 tweets
Okay. I'm live-tweeting again. In a very welcome recommendation, JEP recommends that FOR THIS 2017 valuation, USS revert to the Sept proposed 10 year delay in de-risking and increase Test 1 permitted outperformance of low risk self-sufficiency portfolio from £10 bn to £13 bn. 1/
The increase in permitted outperformance (aka 'reliance on the covenant' or 'gap to self-sufficiency') would simply involve an assumption of growth in the payroll by CPI rather than prudent downward adjustment below CPI. 2/
Actually, I see that the move from £10 bn to £13 bn was a joint suggestion of @Aon & @FirstActuarial (i.e., @UniversitiesUK & @ucu actuaries, but who provided *independent* advice to JEP). JEP recommends increase in gap but doesn't specify a figure. 3/
Read 66 tweets

Initial thoughts in thread to follow👇 #USS…
As ever, the excellent @JosephineCumbo has provided a succinct summary of what the recommendations are, & I don't see any need to reproduce that.
I'm v happy to see the disruptive role of Test 1 being acknowledged & criticised. I'm also v happy to see suggestion that employers attitude to risk & the affect this had on the covenant be re-evaluated. Likewise it's good to see assertion that updated data & measures be used.
Read 11 tweets
BREAKING: #USS Joint Expert Panel, reviewing 2017 #USS valuation, has published its report.

Summary of key recommendations to follow:
The Panel looked in detail at the methodology, assumptions and tests employed by the Trustee, and particularly at USS’s ‘Test 1’ which underpins the 2017 valuation.

"In the Panel’s view this test has assumed too much weight in determining the valuation."

The Panel unanimously recommended 4 areas where adjustments to the 2017 valuation should be considered:

1. A re-evaluation of the employers’ attitude to risk, which would result in a re-evaluation of the reliance on the sponsor covenant.

Read 11 tweets
Consultation on #USS contribution increases opens today. Their website is now live (link). Some differences, on which I comment below, between what's on the website & what's in the hard copy consultation document that we've received in the post. 1/
Here's a link to a pdf of the hard copy consultation document we received in the post. 2/…
In this tweet, I noted my surprise over the following in that document: 3/
Read 18 tweets
🚨🚨🚨Link to @Sam_Marsh101's well-documented, sound & explosive addendum to his JEP submission, which reveals a serious failure on the part of #USS to apply Test 1 properly, in a manner that makes sense of its underlying rationale: 1/…
Recall my earlier "FALSE PROSPECTUS" tweet on Sam's findings: 2/
This thread links to various #USS documents that spell out Test 1's rationale as follows: the gap between the value of the *ASSETS HELD BY THE SCHEME* & the assets required to purchase a low-risk self-sufficiency portfolio must not become too great. 3/
Read 19 tweets
But to determine whether Test 1 is currently satisfied, #USS needs to project assets that would be in the fund in 20 years' time, assuming 67% probable investment returns of prudent discount rate are realised. 2/
For confirmation of above, see this passage from p. 40 of Sept 2017 consultation document: 3/
Read 12 tweets
UPDATE! Last week I tweeted about modelling I'd done of the #USS valuation using cashflow data provided to me by USS. I couldn't release my workings because USS told me not to share their data. 1/

@USSbriefs @OpenUPP2018 @ForPension @JosephineCumbo

After writing my thread, I sent a plea asking USS to reconsider allowing me to release the data, which is nothing more than four columns of numbers relating to projected cashflows for the next 100 years. I even asked for a lesser permission of sharing with the JEP alone. 2/
I'd had no reply by Thursday, so sent another email, this time saying I'd take silence to mean it was OK for me to send the spreadsheet on to the JEP. After all, JEP members have been made to sign NDAs, and they probably already have their hands on similar data. 3/
Read 12 tweets
Here I distill my threads of the past few days into a single message: the @FirstActuarial & @ucu approach to the investment and valuation of #USS is not some radical new theory. Rather, it's in line with the way #USS used to run things, before Bill Galvin took over as CEO. 1/
It's the way #USS ran things from its foundation in 1975 until Galvin took over in 2013. For all of those years, we had DB on all salaries with 1/80th accrual. There was a modest reform in 2011, with the introduction of career average for new members. 2/
But it remained DB on all salaries, at 1/80th accrual. Moreover, it was not merely because of different regulatory regimes that it was possible to provide DB on all salaries. The 2008 and 2011 valuations were conducted under the current regulations. 3/
Read 12 tweets
Want to understand #USS pension valuations? Watch this video! SUCU president & USS negotiator @Sam_Marsh101 explains 3 variants of a valuation model. Notice that if de-risking is cancelled, the picture is much rosier than UUK would have us believe!
If you want to learn more about how de-risking depresses income and increases the deficit, watch the other videos in our USS pensions playlist, especially this one:
And, @leedsucu also provided this great, very accessible analogy back in January:…
Read 5 tweets
As this graph shows, #USS has already engaged in extensive 'de-risking' of its portfolio from equity into bonds during the past 10 years. Calls from @FirstActuarial and @ucu for a cancellation of plans for further de-risking should be assessed in this context. 1/
2007 is an instructive benchmark, since it marks the point of transition from the regulatory regime that was the upshot the 1995 Pensions Act to that which was the upshot of the 2004 Pensions Act. 2/
As this account show, the 95 PA regs were highly friendly to investment in equities. MFR = minimum funding requirement which USS greatly exceeded. Non-pensioner liabilities matched by equities. 'Equity easement' of pensioner liabilities for large schemes such as USS. 3/
Read 38 tweets
Remember how a few weeks back #USS sent me some data relevant to the valuation and, in particular, Test 1? Well, I've been playing around with it and found out some VERY interesting (if technical) things. Read on. 1/

@OpenUPP2018 @USSbriefs @ForPension

Firstly, the new data has pulled the valuation spreadsheet I've cobbled together nicely into line with numbers #USS have published in various documents. In other words, I have got a rough and ready model of the valuation which works pretty well. 2/
September valuation?
USS say 5.1bn deficit, my spreadsheet says 5.0bn

November valuation?
USS say 7.5bn deficit, my spreadsheet agrees

Cancel the de-risking (allowing for prudence)?
My spreadsheet says 0.5bn deficit, same figure I was told last year by @alanhigham100 of USS. 3/
Read 17 tweets
The regs in force during 14% 'contribution holiday' made it possible for #USS to run the scheme in the manner that @FirstActuarial & @ucu now recommend. That's what they did! More below on @USSbriefs JEP submission by @deepa_driver (tagging @Sam_Marsh101):
The '99, '02 & '05 valuations that Deepa analysis were *before* the days of tPR and Pensions Act 2004. They were all governed by Pensions Act 1995, which provided much more scope for #USS to fund & manage the ongoing scheme in the sensible manner @FirstActuarial recommends. 1/
In this long thread, I draw attention to the many ways in which #USS ran their scheme back then in the sensible manner that @FirstActuarial endorses: 2/
Read 11 tweets
W/ @deepa_driver's JEP submission, it appears to me, on closer inspection, that @USSbriefs has gone back in time & devoured the children of their own, i.e., @FirstActuarial's & @Dennis_Leech's, recommended approach to the #USS valuation! Can @Sam_Marsh101 disconfirm? More below.
I.e., I'm finding it difficult to reconcile @deepa_driver's critique of #USS embodied in Point 1 of linked @USSbriefs manifesto w/ the manifesto endorsement in Point 3 of @FirstActuarial's & @Dennis_Leech's recommended approach to the 2017 valuation. 1/…
The more I read the 2002, 2005, & 2008 valuations, the more I'm struck by how similar #USS's approach was back then to the approach First Actuarial (FA) is recommending that #USS follow now. 2/
Read 34 tweets
A reason why @Sam_Marsh101 may be right re significance of @deepa_driver's @USSbriefs: a few months ago, #USS removed valuations pre-2011 from their website. They were asked to restore them, but they didn't. Why did they remove them and not restore them?

There was something that struck me as odd about @UniversitiesUK's April denial that they ever took a 'contribution holiday': their definition of 'contribution holiday' as involving less than what the *trustee* requires. 1/
Read 15 tweets
It's been a pretty busy week at @USSbriefs HQ.

We published @BenPatrickWill's fantastic brief on what's coming down the chute in terms of transformation of HE into performance data. An essential read – & glorious @acupunctureUSS design #USSbriefs40… 1/
We published Richard Farndale's (in consultation with @CambridgeUCU Exec) excellent set of questions for the #JEP in our @OpenUPP2018 series #USSbriefs41… 2/
We published @carlomorelliUCU's excellent submission to #JEP (in our @OpenUPP2018 series) on the wider context & political economyof EU legislation – & discount rates – around pensions #USSbriefs42… 3/
Read 9 tweets
Brexit and @UCU: the union will "consult with members on whether UCU should support a second referendum on any final Brexit deal negotiated by the UK government". 1/
This is highly relevant to universities in a number of respects, not least of which #USS: 2/
The union's No Detriment to the status quo position might stand a chance only if #USS is right that the gilt yield will revert by +1.5% above market forecasts. 3/
Read 8 tweets
I'm loving how @OpenUPP2018 is, er, opening things up.

We wrote to everyone who had submitted to/given evidence at JEP.

David Miles responded – see his piece on Test 1… (#USSbriefs36).

@MikeOtsuka read Miles's brief – & disagreed.


So Mike Otsuka @MikeOtsuka then made a (2nd) submission to JEP engaging w – contesting – Miles.

And then also responded to our invitation from #OpenUPP2018 – see "USS’s Test 1 is not too risky and how Test 2 should be changed" #USSbriefs39…

And you can read the exchange for yourself before the JEP reports. Since #OpenUPP2018 has allowed to be be pulled outside of the closed doors of the JEP.

Opening things up, as we had hoped.

Read 6 tweets
ATTENTION MUST BE PAID to a tension between statements to FT's @JosephineCumbo from (1) #USS and (2) @TPRgovuk. Details in tweets below.
Read 15 tweets
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