The Universities Superannuation Scheme (USS) trustee has said that the scheme's funding position looks "very encouraging" ahead of the key decision points for its 2023 valuation, with the latest monitoring update revealing a £7.6bn surplus.

The update was shared alongside the latest quarterly monitoring report to the end of March 2023, the effective date of the 2023 valuation, with USS group chief executive, Bill Galvin, stating that the direction of travel for the scheme is "clear".

Whilst Galvin caveated that there are differences between the monitoring update and a full valuation, he confirmed that overall market conditions and investment expectations at the end of March were slightly more favourable than at the end of last year.

This is reflected in a higher potential surplus of £7.6bn and a lower implied future service contribution rate of 17.5 per cent in respect of the current level of benefits.

In addition to this, the future service contribution requirement at the end of March for the pre-1 April 2022 benefit structure, on the monitoring basis, was 21.8 per cent.

However, Galvin confirmed that the USS is still in the process of collecting and considering the comprehensive evidence and advice that will inform the trustee's assessment of the position in respect of the 2023 valuation, ahead of the consultation with Universities UK (UUK), on behalf of employers, on the proposed Technical Provisions.

In the meantime, Galvin reiterated the guidance previously shared with the Joint Negotiating Committee (JNC), confirming that the overall contribution rate required for the current level of benefits is unlikely to be in excess of 20 per cent of payroll.

In addition to this, the overall contribution rate that would be required for the pre-1 April 2022 benefit structure, in the future, remains "very unlikely" to be in excess of the current cost of future service (25.2 per cent).

The University and College Union (UCU) highlighted the latest update as confirmation that the union is "on course for the biggest pension win in UK trade union history", after members recently voted to move ahead with pension proposals agreed with scheme employers.

"Well done to every single member who voted for strike action and stood on the picket line in their tens of thousands, this is your win," UCU general secretary, Jo Grady, stated.

"We were told it was impossible to take back a stolen pension but we are now on course for a historic victory that will send shockwaves through the workers movement.’

The USS trustee is currently aiming to consult UUK on the proposed Technical Provisions in mid-July to mid-September, with UUK, in turn, consulting sponsoring employers.

While Galvin's update acknowledged that the accelerated timetable for the valuation is "ambitious and not without its risks", he argued that it is achievable if parties continue to work together positively towards implementing any changes the JNC decides pm by 1 April 2024.

Providing a broader update on the scheme, Galvin also shared further insight into the impact of the recent Capita cyber incident, after the scheme previously revealed that the personal details of around 470,000 active, deferred and retired members may have been accessed during the incident.

In his update, Galvin confirmed that the USS trustee has emailed more than 400,000 members to alert them to this event and are sending letters to those members who have not shared their email addresses with the scheme.

He also revealed that, as of the morning of the 17 May, the information on the USS website had been viewed by more than 86,000 people, although enquiries to its call centre and dedicated email address were in the low to mid hundreds.

Galvin suggested that this could mean that the information and advice provided, within a day of being formally notified by Capita, has been enough for members to work with in the short-term.

“But the data in question means the members impacted will need ongoing support," he continued. "So, they are going to be given access to a leading identity protection service, free of charge, and we will be writing to them as soon as possible setting out how that will work.

“I want to assure you that data privacy and security is a top priority for us. Having reviewed our own systems and controls to ensure they remain robust, we are very confident members’ pensions remain secure.

"But we know our members will be concerned about their personal data. We very much regret that this has happened and are committed to supporting them through this issue.”

Share Story: