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A question that @Sam_Marsh101 reports to have arisen in today's JNC meeting: 1/
That's a good question, along lines of a challenge @Sam_Marsh101 posed for Option 3 on another thread. I think my answer to that challenge👇provides a response (mutatis mutandis) to this question. 2/
Below I apply my answer to that challenge more directly to the question @Sam_Marsh101 raises in the embedded tweet in "1/" ☝️. 3/
Option 3 involves rates fixed in advance, of 30.7% in yrs 1-2 & 34.7% in yrs 3-4, where these rates cover what would be due under Option 2 in the event that all contingent steps were triggered over the next 4 years. 4/
Therefore, insofar as contributions payable over the next 4 years are concerned, Option 3 involves no less willingness to bear risk than Option 2 (where the latter involves 29.7% plus triggers for higher contributions). 5/
There is the following difference between the two options: Option 3 is superseded by the next full actuarial valuation a year earlier than Option 2 (as at March 2020 rather than March 2021). 6/
Making the next full AV a year earlier doesn't, however, imply less willingness to bear risk. Rather, it implies a desire to bear more accurately measured risk sooner, rather than being subject to a crude gilts-plus proxy TP measure of risk for longer. 7/
Re👇, I read @Sam_Marsh101 to be indicating that @TPRgovuk is pushing back against Option 3 as insufficiently prudent. Rather than a trap, it strikes me as the least bad response to competing pressure from UCU/UUK/JEP v tPR. 8/
We need to sharply distinguish the claim that tPR is applying pressure to #USS, which they can't ignore, from any claims about the justifiability of tPR's stance. I think tPR is being too conservative & that a 26% valuation is actuarially sound. 9/
Nevertheless, the independent trustees and the USS execs will be on firm ground in refusing to approve & submit a 26% No Deficit, No Detriment valuation that @TPRgovuk deems clearly beyond the limits of acceptability. 10/
The evidence is that there are strong, legitimate objections to the manner in which the #USS execs have engaged w/ UUK & UCU & handled the process of the current valuation. There's clearly been a serious breakdown of trust. 11/
But everything in "11/" ☝️ is consistent w/ the following, which I also think true: on the merits, Option 3 provides the least bad response to competing pressure on #USS from UCU/UUK/JEP v tPR, the latter of which can't be ignored. 12/12
