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Joint statement on JEP

Published: 22nd January, 2020

Cover of JEP report, December 2019

Following the USS strikes of February and March 2018, Leicester UCU and University of Leicester’s leadership team established a joint pensions group. This group has met regularly since. Below and attached is a joint statement on the second report of the Joint Expert Panel, published in December. We are pleased that we have been able to find common ground on this.

Joint Statement by University of Leicester and Leicester UCU on USS and the Joint Expert Panel

21 January 2020

USS is a great asset to the sector bringing consistency of pensions between competing employers. It delivers excellent benefits and good value for money. The investment performance in both the DB and DC sections has been very strong. The mutual nature of the scheme has enabled DB pensions to remain in the sector in a way which would be unlikely to have been sustained without USS.

We strongly support the JEP’s proposed introduction of a new purpose statement and see the example statements given by the JEP report as helpful. We agree that there should be a shared set of valuation principles agreed by all stakeholders. We agree that the key stakeholders must, collectively, provide leadership to the scheme, its members, participating employers and the wider HE sector.

We strongly support the findings around valuation governance. A reset is needed:

  • We would encourage greater visibility of the Trustee Directors to provide leadership to the process alongside the USS Executive.
  • We agree that reform of the JNC could be beneficial. We support the establishment of a new Steering Group with membership at the highest level drawn from key stakeholders. This group must work in a way to encourage cooperation and negotiation and have a mind to the long-term health of the scheme rather than focussing solely on the triannual valuation cycle.
  • We agree that UUK’s role could be seen to conflict with other primary functions and that a better approach could be for employer representation through another body such as UCEA.
  • We are supportive of UCU continuing to represent scheme members and that they should explore any further reasonable ways in which they can represent the views of both UCU members and non-members.
  • We welcome the proposal to create a Funding and Valuation subcommittee of the USS board.

We support the recommendations of the JEP on alternative paths to the valuation. The scheme benefits from being neither mature nor closed, being cash flow positive and is backed by a strong mutual employer covenant and the level of risk taken should acknowledge this. We support the adoption of a dual discount rate and would like to see this used in the 2020 valuation.

We are very concerned at the data provided about opt-out rates for USS. Pensions are an important part of the employment package in the sector and it is very concerning that opt-out rates are so much higher than the national average. We strongly encourage the key stakeholders to consider how USS benefits can be offered in a more flexible way such that there can be more options, some at lower contribution rates, made available to members.

We strongly support the mutual nature of USS. Sectionalisation would undermine a key strength that USS is a sector-wide scheme offering common benefits underpinned by a strong mutual covenant.

We are pleased that joint talks to discuss the report by UCU, UUK and USS were announced shortly before Christmas and are now ongoing. We urge all parties involved to work towards incorporating as far as possible the JEP report recommendations into the 2020 valuation of the scheme.

Nishan Canagarajah – President and Vice-Chancellor, University of Leicester
Sarah Seaton and Deirdre O-Sullivan – Co-Chairs, Leicester UCU
21 January 2020