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The £19bn solution to the 2018 #USS valuation:
In their autumn consultation, @UniversitiesUK @USSEmployers overwhelmingly accepted the following 4 JEP recommendations, involving an increase in their 'risk appetite': 1/
In their autumn consultation, @UniversitiesUK @USSEmployers overwhelmingly accepted the following 4 JEP recommendations, involving an increase in their 'risk appetite': 1/
i. Increase Test 1 reliance on covenant from £10bn to £13bn
ii. Delay onset of 'de-risking' by 10 years
iii. Smooth future service contributions
iv. Allow investment outperformance in calculating deficit recovery contributions (DRCs) 2/
ii. Delay onset of 'de-risking' by 10 years
iii. Smooth future service contributions
iv. Allow investment outperformance in calculating deficit recovery contributions (DRCs) 2/
#USS has rejected ii & iii but has accepted i & iv so long as accompanied by automatic triggers of higher contingent contributions (CCs). 3/
#USS has also reiterated that the 'Trustee's view on [employer] capacity for risk' is such that they would be willing to go farther w/r/to i & accept an increase reliance on the covenant to £19bn👇. 4/
Increase in reliance from £13bn to £19bn doesn't increase risk to a greater extent than sticking to £13bn but also embracing ii-iv. So, in embracing i-iv, employers have already indicated that £19bn reliance ON ITS OWN, in the absence of ii-iv, is within their risk appetite. 5/
As explained in this tweet👇and the ones below it, £19bn reliance ON ITS OWN, in the absence of ii-iv, would provide a justification of all aspects of the Aon/UUK contingent contribution proposal. 6/
Moreover, employer acceptance of £19bn Test 1 reliance at year 20 would silence #USS's repeated claim (e.g.👇) that the current c. £20bn level of reliance (aka 'self-sufficiency deficit') is so much greater than the level of reliance employers previously endorsed for yr 20. 7/ 
Hence, it would undermine #USS's case for a self-sufficiency deficit trigger for CCs & pave the way for Aon/UUK's proposed technical provisions trigger for CCs. 8/
£19bn reliance ON ITS OWN, in the absence of ii-iv, may provide the most promising path to the Aon/UUK proposal of 29.2% contributions & their specific CC triggers for higher contributions. 10/
It is therefore vitally important that @UniversitiesUK @USSEmployers make clear to #USS that their response to the autumn consultation on JEP already implies that £19bn reliance, on its own & without ii-iv, falls within employer risk appetite. 11/11
