Thread by @JosephineCumbo

#USS has sent a further statement responding to questions on their statement this morning. USS was asked whether the figures, released to @Sam_Marsh101 last week, were also shared with the Joint Expert Panel and where they found errors with his analysis.

Response to follow:

1/

USS: "We provided all of the information and analysis that was requested by the Joint Expert Panel. Given that it ignores downside risk, the approach Dr Marsh looks to support by using asset projections alone is not applicable in the context of USS.

2/

USS: As such, it was not requested by - or provided to - the JEP or employers. It is not as fundamental to the valuation approach as Dr Marsh seems to believe or as recent commentary would suggest.

3/

USS: Furthermore, the analysis in question was requested by Dr Marsh in his role as a UCU representative on the JNC, with the understanding that it was to be shared and discussed with his colleagues in that forum. We made that clear to Dr Marsh and we were expecting to (cont)
4/

USS (cont): ..have the opportunity to engage with him further to help him clarify his thinking. Our approach to the valuation has been constructed with independent advice from our scheme actuary and covenant adviser, and has been subject to independent review by a (cont)

5/

USS (cont): ..third party actuarial firm and by the Pensions Regulator. None of these reviews has suggested there is scope to take the level of risk in the funding arrangements that is proposed by recent commentary."

STATEMENT ENDS

6/6

#USS has got back to me on further points, to follow:

"Dr Marsh’s analysis is not wrong in isolation – but it is simply not an adequate premise on which to fund the scheme."

1/

USS: "It has been clear from USS valuation discussion papers, and from the JEP’s analysis, that it is expected that the cost of pension provision in future will fall, as interest rates rise. We have been clear on that since the earliest discussions on the valuation.

2/

USS: "Dr Marsh’s approach in effect takes the JEP’s proposals to smooth contributions over two valuation cycles, and extends that to 20 years. It is not surprising that in aggregate, current contributions are ultimately adequate."

3/

USS: "The trustee’s challenge is that this depends on an assumption that interest rates will rise in the future. If that does not happen, then the deficit exposure of the scheme in the short term could be substantial."

4/

USS: "The trustee’s view is that contributions must rise in the short term to manage these risks, acknowledging that the most likely (but not certain) path for contributions is that they fall in the future."

5/

USS: "However, the trustee’s duty is to ensure the scheme is robust even if interest rates do not rise."

ENDS

6/6