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The Pensions Regulator taketh away, the Pensions Regulator giveth:
In defending a high 5% 'upper bookend' deficit recovery contribution (DRC) rate for the 2018 valuation, #USS appeals to tPR's recently released Annual Funding Statement👇. 1/
In defending a high 5% 'upper bookend' deficit recovery contribution (DRC) rate for the 2018 valuation, #USS appeals to tPR's recently released Annual Funding Statement👇. 1/
Aon/UUK had previously been pushing for lower DRCs on grounds that this would encounter least resistance from tPR. It will, however, be difficult to reduce DRCs while keeping the recovery period as short as tPR is now calling for. 2/
On the other hand, Aon/UUK had been refraining for pushing hard for adoption of JEP proposals that would increase the discount rate on past accrual, because #USS claimed that such increases would fall afoul of tPR gilts+ benchmarks. 3/
But in their very same Annual Funding Statement in which they take a harder line on DRCs, tPR also denies that they employ such gilts+ benchmarks. This denial is an implicit rebuke of #USS. See this blog post👇. 4/
medium.com/@mikeotsuka/on…
medium.com/@mikeotsuka/on…
#USS has also recently revealed that the trustee has a risk appetite of £19bn reliance on covenant rather than JEP-proposed £13bn. 5/
Both JEP & Aon/UUK had previously avoided calls for such an increase in reliance to £19bn, because they thought #USS would reject this on grounds that it would breach tPR gilts+ benchmarks. 6/
Now that we've learned that tPR doesn't employ gilt+ benchmarks & that £19bn reliance falls within the trustee's risk appetite, @UniversitiesUK should seek confirmation from @USSEmployers that they are now willing to accept £19bn reliance. 7/
As explained in this tweet👇and the ones below it, adjustment of the valuation to £19bn reliance would provide a justification of all aspects of the Aon/UUK contingent contribution proposal. 8/8
