The Joint Expert Panel (JEP) has published its second report aimed at improving the governance and communication of the Universities Superannuation Scheme (USS).

The panel was set up by the Universities and Colleges Union (UCU) and Universities UK (UUK) after industrial action over the scheme was taken by UCU members in 2018.

In its report, the JEP recommended establishing a new, jointly agreed purpose statement and shared valuation principles, and a series of joint bodies within the USS to ease the issues affecting the scheme.

It also encouraged improvements to the operation of the Joint Negotiating Committee, which comprises UCU and UUK representatives, and the agreement of a “more appropriate” valuation methodology driven by the agreed purpose of the scheme and a re-articulation of the participants risk appetites.

Earlier this month (6 December), the USS published its timeline for the 2020 valuation, which is due to be completed by June 2021.

The JEP recommended the adoption of a dual discount rate approach to the valuation which would differentiate between past and future service and to investigate “different approaches to contributions” in order to address the high level of opt outs among younger and lower paid staff.

The Pensions Regulator (TPR) said that the JEP’s recommendations “align” with its own views.

A TPR spokesperson commented: “In particular, we agree with the need to ensure the scheme’s long-term sustainability. The adoption of a dual discount rate broadly aligns with our proposed approach for the new DB funding code, which we will be consulting on next year.

“It will be important that these discount rates are set at appropriate levels and that there is a clear explanation of the risks for the scheme.

“Work is already underway on the scheme’s 2020 valuation. We are working with the trustee to understand the valuation timetable to ensure the 15-month statutory deadline is met, and we look forward to seeing how the trustee and stakeholders will take forward the report’s recommendations.”

UCU general secretary, Jo Grady, said that the union “welcomes” the JEP’s report.
She added: “This second report looks at key issues around the governance of the scheme and makes some strong recommendations that, if implemented, should give scheme members greater confidence about how the scheme is run. We are particularly pleased that the report highlights the importance of mutuality.

“This report sets out a path which may provide an opportunity for lower contributions than USS has scheduled. We need all parties to now engage with the report in order to secure members’ pension benefits in an affordable way and to ensure the scheme’s long-term sustainability.”

USS warned that, although it supported the changes, other must be mindful of the "challenging" timetable that has been set to complete the 2020 valuation on time.

USS Trustee Board chair, Sir David Eastwood, said: “The JEP’s latest report to stakeholders is ambitious in its scope. We stand ready to work with UUK and UCU as they consider carefully the recommendations they wish to take forward.

“We welcome the suggestions aimed at increasing trust and understanding across the scheme, its members and its stakeholders."

The JEP chair, Joanne Segars, concluded: “The JEP does not underestimate this task, but we believe that it would be failure for scheme members, sponsoring employers and the sector if our recommendations are not seriously considered”.

UCU members at 60 UK universities voted to take strike action earlier this year over pension disputes, with further industrial action planned for 2020.

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