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.@Aon's advice to employers has just been released. @kevinwesbroom is one of the authors. (Tagging @USSbriefs)
A crucial line: "If the individual changes proposed by the JEP were all applied to the 2018 valuation, then the resulting contribution rate would be lower (we understand c.26%)." 1/
Followed by a 'BUT': "However, it should be recognised that we need to find an overall outcome that is acceptable to the USS Trustee and which TPR would be content with." 2/
Another key passage: 3/
""As mentioned, the USS Trustee’s view (we believe supported by TPR) is that the Lower Bookend is not possible absent contingent support. But if the Upper Bookend were adopted, then the proposed contribution levels will likely be unsustainable for many employers...." 4/
"...In our view, contingent support is therefore worthy of consideration with the hope of identifying an approach that all stakeholders (employers, members, USS Trustee, TPR) can live with given their different points of view." 5/
The same point re-occurs in the concluding summary: "While our preference would have been for the USS Trustee to accept the JEP recommendations in full given the employer support..." 6/
"...we can see merit in the approach being developed by the USS Trustee as a potential way to bridge the different perspectives of the various stakeholders including TPR." 7/
.@Aon also makes a number of specific and useful suggestions regarding what would trigger higher contributions and how the triggers might work. 8/
General impressions: This is an attempt to thread the needle to arrive at a valuation acceptable to tPR, USS & employers, which will also make possible a settlement between UUK & UCU (or at least which won't provoke a strike even if settlement is initially impossible). 9/
The means of achieving this end is to arrive at a valuation that comes as close as possible to JEP's modelled +3.2% contributions, w/ no automatic triggers of higher contingent contributions. 10/
A number of ways are suggested for lowering #USS's current lowest bookend +3.7% proposal in their valuation, down to +3.2%. 11/
One interesting suggestion is to rely exclusively on smoothing future service plus investment outperformance in recovery period, as neither of these would have an impact on tPR's gilts+ benchmark on discount rate re past accrual. 12/
They also suggest that the automatic trigger be, in effect, Rule 76, applied between valuations. But as in the case of its normal application, Rule 76 is triggered only if JNC doesn’t propose changes to benefits instead during a time-limited period. 13/
Plausible case that Rule 76 should be triggered between valuations only if things have deteriorated so much since the last valuation that we can’t afford to wait till the next valuation before triggering Rule 76 contribution increases in the absence of benefit changes. 14/
Along somewhat similar lines, see this: "Contingent Contributions will be more credible if they apply in more extreme scenarios rather than business as usual variations;..." 15/
"...and some may wish for the stakeholders to have the opportunity to consider other options through the usual JNC process with the Contingent Contributions being a default." 16/
I think it also lends support to my analysis of the constraints we're operating under in this long thread: 18/
...and also helps confirm my conclusion 👇to the thread immediately above. 19/19
