USS guesswork

January 1, 2015

We write as members of the Universities Superannuation Scheme who are concerned that negotiations over the future of our pension scheme are based on the projection of a very large deficit based on an actuarial model that has been publicly challenged, if not wholly discredited. We do not intend to rehearse the arguments here, except to note that the model currently used includes mutually contradictory assumptions, “prudence layered on prudence” (to quote Universities UK) and “de-risking” that is required only on winding up. It also premises future asset growth on a “gilts plus” approach that is not required by the regulator. The result is that the various alternative valuations of the scheme range from a surplus of more than £440 million to a deficit of £12.3 billion.

It makes no sense to negotiate a solution to a problem that either does not exist or whose scale cannot be predicted with a credible model that enjoys the consensus support of experts and stakeholders.

Members of the USS, and indeed employers, wish to know that any changes made are justified by evidence and are proportionate. Any perception that there is a rush to make changes on the basis of a discredited valuation would undermine confidence in the USS and invite legal challenges, as well as precipitating an escalating and damaging dispute with the University and College Union.

As time is short, we urgently seek confirmation from the USS board that there will be no attempt to implement changes to USS rules at the next board meeting on 15 January. Any public assurances the USS can make on this matter would be extremely helpful.

USS members may add their name to this petition [here].

Sean Wallis
University College London and UCU national executive committee

Michael Otsuka
member of the Pensions Advisory Group and member of the court of governors, London School of Economics

Andreas Bieler
University of Nottingham, UCU NEC

Vicky Blake
Durham University, UCU NEC

Lesley McGorrigan
University of Leeds; UCU NEC

Alison Sealey
University of Lancaster

Gregory Sorkin

Jude Howell

Malcolm Povey
University of Leeds

Ray Bush
University of Leeds

Richard Farndale
University of Cambridge

Simona Iammarino

Steve Edwards
University of Liverpool

Tim Forsyth

Alan Brown
University of Liverpool

Andrew Malpuss

Bob Brecher
University of Brighton

Briony Thomas
University of Leeds

Carlo Morelli
University of Dundee

Chandrasekhar Reddy Anekallu

Chris Hooley
University of St Andrews

Claudia Baldoli
Newcastle University

Costas Gabrielatos
Lancaster University

Craig Brandist
University of Sheffield

Daragh O’Reilly
University of Sheffield

David Stewart
University of Liverpool

Eleni Michalopoulou
University of Liverpool

Elton Barker
The Open University

Geoff Williams

Geoffrey Abbott
Newcastle University

Gethyn Lewis

Helen MacCarthy
University of Hull

Iain McKay

James Eastwood
Soas, University of London

Jan-Peter Muller

John Kent
University of Leeds

John Parrington
University of Oxford

Jonathan Rosenhead

Julie Hearn
Lancaster University

Kate Meagher

Kevin Doogan
University of Bristol

Kristin Surak
Soas, University of London

Mark O’Brien
University of Liverpool

Martin Fry

Martin Moloney
Soas, University of London

Mathew Page

Mike Cushman

Mike Holmes
University of Glasgow

Nalini Vittal

Pam Clarke
University of Liverpool

Paul Attinello
Newcastle University

Paul Hubert
University of Kent

Paul Hudson

Paul Kuin

Paul Timms
University of Leeds

Peter Fletcher
Keele University

Rachele De Felice

Rick Saull
Queen Mary University of London

Roger Woodliffe

Rory Fitzgerald
City University London

Ruth Dar

Saladin Meckled-Garcia

Stacy Gillis
Newcastle University

Steffen Hertog

Sue Blackwell
University of Birmingham

Tarak Barkawi

Tony Brown

Tony Sullivan
University of the Arts London

Tony Whelan


The Conservatives say that they want to get the budget into surplus in future and pay down the national debt. If this is ever achieved and is taken too far, it could have unexpected consequences.

It is the national debt that provides the gilts in which the pensions regulator is pushing defined benefit pension funds such as the USS to put more of their investments. Those gilts also provide a safe haven for those among the increasing numbers of people with defined contribution pensions who do not feel that they have the financial savvy to invest more adventurously, or those who are close to their retirement and cannot afford to take any risk.

It would be good to know what effect a reduction in the national debt would have on the gilts market on which our pensions depend, and what minimum national debt is needed to provide sufficient gilt investments for the country’s private pensions.

Conversely, one wonders if the recent government pressure on pension funds to invest more in gilts despite their current low yields is due to the need to finance the now-increasing public debt. Private pensions and the national debt are not independent of each other – they exist in a perhaps delicate symbiosis that deserves some attention.

Susan Cooper
Professor of experimental physics
University of Oxford

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