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Michael Otsuka
@MikeOtsuka
, 8 tweets, 12 min read Read on Twitter
A significant & I think new statement from tPR, of relevance to #USS: "We do not assess the appropriateness of schemes' TPs or discount rates based on predetermined relationships to gilt yields or other indices."
It appears, from this passage👇, that #USS's Test 1 & concern re short term reliance is grounded in pressure from tPR.
👆@USSEmployers @ucu @AlistairJarvis @JoanneSegars @SallyBridgeland @BrinleyDavies @Sam_Marsh101 @Flibitygibity @carlomorelliUCU @HershMarion @Dennis_Leech @DaveGuppy @UofGVC @adamtickell @RedActuary @Derek_Benstead @kevinwesbroom @GuyCoughlan @USSbriefs @JosephineCumbo @Wonkhe
On p. 13 of their linked 2 Jan 2019 consultation document, #USS says 'the final discount rate adopted for the 2017 valuation of gilts + 1.20% is still above the level the Regulator views as appropriate for a “tending-to-strong” covenant'. 1/
ussemployers.org.uk/sites/default/…
This statement👆appears to be flatly contradicted by today's statement from @TPRgovuk that 'We do not assess the appropriateness of schemes' TPs or discount rates based on predetermined relationships to gilt yields or other indices.' 2/
This is a very serious matter, and scheme members as well as @USSEmployers would, I'm sure, be extremely grateful if @JosephineCumbo (aka the only person who can ever elicit an answer from #USS) would press #USS on their apparent misrepresentation of tPR guidance. 3/3
👆@USSEmployers @ucu @AlistairJarvis @JoanneSegars @SallyBridgeland @BrinleyDavies @Sam_Marsh101 @Flibitygibity @carlomorelliUCU @HershMarion @Dennis_Leech @DaveGuppy @UofGVC @adamtickell @RedActuary @Derek_Benstead @kevinwesbroom @GuyCoughlan @USSbriefs @JosephineCumbo @Wonkhe
See this follow up👇.
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More from @MikeOtsuka see all

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Michael Otsuka
@MikeOtsuka
Strong @USSEmployers & @UniversitiesUK support of @kevinwesbroom & John Coulthard's proposed reduction of deficit recovery contributions (DRC) from 5% to 3.5% is essential to the success of Aon's Proposal for contingent contributions. 1/
As I note in tweets 12/-14/ 👇, Aon's case for 1%, rather than 1.5%, stepped increases involves a lowering of the upper bookend rate from 33.7% to 32.2% via reduction of DRCs from 5% to 3.5%. 2/
In the recently submitted 2017 Rule 76.4 valuation, DRCs are 5%. Hence they would remain unchanged under #USS's proposed upper bookend. Aon notes 👇that keeping DRCs at 5% introduces an extra layer of prudence, given that the deficit is now much lower. 3/
Read 13 tweets
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Michael Otsuka
@MikeOtsuka
A summary of Aon's contingent contribution proposal 👇, which @UniversitiesUK is circulating for consultation with @USSEmployers. 1/
ussemployers.org.uk/sites/default/…
"For the Proposal, we assume that 29.2% is adopted [for the lower bookend, rather than #USS's 29.2%], although it is not clear that this is achievable with the USS Trustee." 2/
Contingent contributions would be in three steps, as in #USS's proposal. But the steps would each involve a 1% increase, rather than #USS's 1.5% increase. 3/
Read 31 tweets
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Michael Otsuka
@MikeOtsuka
Under #USS's current valuation, a relatively modest 3.7% rise in contributions from 26% to 29.7% might be possible, so long as accompanied by triggers of automatic contribution increases if funding deteriorates during the next 3 years. 1/
Such increases might be triggered by sufficiently large increases in the technical provisions (TP) deficit. In this blue-highlighted passage👇, #USS suggests that, in order to be sufficiently "objective", TP triggers would have to be based on a 'gilts plus' discount rate. 2/
Below I argue that an "all yields plus" TP discount rate would be just as objective as, but more accurate than, a gilts plus TP discount rate, where "all yields" includes dividend, rental, & corporate bond yields as well as the gilt yield. 3/
Read 15 tweets

Related threads

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Felicity Callard
@felicitycallard
So: #USS is undertaking a new valuation (of funding position in March 2018). 1/ #USSstrike
Bill Galvin, #USS CEO, implicitly puts onus on #UUK for problems of 2017 valuation, stating that employers had given a "very clear view" to USS to "take less risk than was laid out in its [USS's] original proposals" uss.co.uk/how-uss-is-run… 2/ screen shot of part of document linked to in tweet
There is clearly dispute between #USS and #UUK over this: the #JEP, we should remember, said that it had 'not taken a view' on the differing perspectives of #UUK and #USS over the shift from the Sept to Nov TPs & valuation assumptions ussjep.org.uk/files/2018/09/… 3/ screen shot of p. 45 of document linked to in tweet
Read 10 tweets
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Josephine Cumbo
@JosephineCumbo
UPDATE on 2017 #USS valuation.

Universities UK has told me:
“Employers support the JEP’s recommendations, subject to acceptance from the USS Trustee and The Pensions Regulator, and to further information for employers on risk and its implications.”

1/
#UUK: ”We look forward to discussions with UCU, and with the USS Trustee, over the coming weeks as we seek a jointly agreed solution.”
2/2
#UUK has further clarified that employers support “all of the recommendations put forward by the panel” – subject to the conditions outlined in earlier tweeted statement.
Read 14 tweets
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Felicity Callard
@felicitycallard
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 medium.com/ussbriefs/numb… 1/
We published Richard Farndale's (in consultation with @CambridgeUCU Exec) excellent set of questions for the #JEP in our @OpenUPP2018 series #USSbriefs41 medium.com/ussbriefs/cruc… 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 medium.com/ussbriefs/euro… 3/
Read 9 tweets
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Felicity Callard
@felicitycallard
I've been reading up on the 3 UUK nominees for the UUK–UCU Joint Expert Panel: Ronnie Bowie, Sally Bridgeland, and Chris Curry ipe.com/countries/uk/u… #USSStrike 1/
Let's start with Ronnie Bowie, Partner at Hymans Robertson, who 'works as a Scheme Actuary & Investment Adviser to a number of large private & public sector schemes and has built a reputation as a respected expert witness' hymans.co.uk/people-finder/…
I've been going back to 10 or so years, looking at how actuarial science is discussed before and after the 2008 economic crisis. I am outsider to the field – approaching it as someone who researches recent histories & geographies of various human sciences
Read 41 tweets
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Jo Grady
@DrJoGrady
Unhappy about proposed #USS pension cut?

Not convinced current #UUK offer protects you from significant & long term pension cuts. What if I told you that it's not the only cut your #USS pension has experienced 👇👇👇 #USSstrikes
Cut 1: Employer pension contribution holidays

Between 1983-1997, employers cut their contributions from 18.55% to 14%, resulting in an estimated £7 billion being lost from the value of the fund.
Cut 2: Closure of USS as a final salary (FS) scheme

By closing FS scheme in 2015, & moving members into a lower value DB scheme, it is estimated the value of a #USS pension was cut by 20% on average.
Read 5 tweets
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Martin O'Neill
@martin_oneill
This looks like good news from @TPRgovuk, opening the door to a #USS deal on the basis of the Sept 2017 valuation involved in the initial @UCU recovery plan, if only the remaining hold-out VCs will accept this. 1/x
But we should in any case beware one kind of mistake which comes from treating @TPRgovuk as some unmovable exogenous constraint on a #USS deal. (1) The #tPR view itself is in part a function of VC’s avowed positions on risk levels. 2/x
And, (2) as @AdamJTucker has pointed out, there is a good degree of flexibility in how @TPRgovuk operates, and its regulatory framework allows space for appropriate intervention from the government. See embedded thread:



3/x
Read 19 tweets

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