Will we ever CI to eye with employers on Conditional Indexation
Quite a lot of thoughts about conditional indexation (CI) and the USS pension scheme in the run up to UCU HE Sector conference.
I am currently a pensions negotiator (alternate) on UCU’s Superannuation Working Group (SWG). These views are my own, may change in future, and should not be taken as UCU policy, indicative of the views of SWG as a whole, nor as an endorsement of conditional indexation.
With gratitude to Jackie Grant for proofreading, editing, suggestions, finding links, persuading me to become a negotiator- it will be fun, she said- and for making me laugh.
(Sarah) Joss, UCU SWG.
If you already have a good grasp of USS and the principle of CI you can skip ahead to “Grand designs: the devil is in the detail”
Tl:cba; thoughts on HE12 and summary at the end
What is conditional indexation (CI)?
In simplest terms: when the scheme investments are doing well you get more money when it isn’t doing well you get less. Sounds simple but inevitably, it being pensions, it isn’t — more on this later.
Indexation and revaluation
If your pension were not indexed, then inflation would erode their value over time meaning less buying power at the end of retirement than when we retired. Pensions are indexed — increased annually — although not necessarily increased by as much as inflation. Legislation in the UK means that for pensions in payment, where rights were accrued since 2005, there is a minimum indexation of the lowest of inflation or 2.5%, with a floor of 0%. That is when inflation matches or exceeds 2.5%, the scheme must index it by at least 2.5%, if it is between 0 and 2.5% they must match inflation and where inflation is negative the pensions will not decrease.
In a Career Averaged (CARE) scheme like USS where you build up a proportion of your annual income per year in work (accrual) if that stayed frozen at the amount it was in the year you earned it, it would be worth less, possibly even worthless by the time you retired.
Inflation is cumulative and these days relentless, and the effect over a 30 to 40 year career and a 25 to 40 year retirement is alarming. Taking the last 34 years of CPI, pensions would have lost around 50% of their value without indexation.
The increase in pension promises, those not yet in payment to offset inflation are called revaluation. Increases to pensions in payment are called indexation.
From now on both of these will be lumped under the single term indexation except when it is important to distinguish them.
USS revalues and indexes pensions earned since 2016 with ‘soft cap’ indexation. Full indexation up to 5% inflation then 50% between 5 and 15%. For example if inflation is running at 10% they are increased by 7.5%.
Therefore, for most of the last 20 years USS has kept its value (certainly better than our pay!), but recently our pensions have lost out a bit, at just over 3% from the soft cap applied in 2022 and 2023.
Do we ever get that back? One (rare) circumstance in which any loss can be recouped is when inflation is negative — because of the 0% floor. As yet, when our pensions have lost value in this way, this has not been reinstated. It would be possible, subject to ‘sufficient surplus’, for the Trustee to award an additional above CPI indexation on a discretionary basis¹, and this could include any remedy of such a loss.
This brings me on to a key point about indexation. Once your pension has been earned (accrued/promised) the indexation level cannot be reduced. So if you were promised an income equivalent to the future value at retirement of say £20,000 per annum, for however long you are retired, with soft cap indexation then that is what you must get — the amount of money at retirement that has (subject to the soft cap) the same buying power as £20k today however many years in the future you draw that income.
Recently when we were threatened with reduced indexation, that would have only applied to pension promises earned after the point it changed, those earned before that date would continue to be indexed according to the rules at the time they were earned.
Trust me I’m a trustee
The scheme Trustee board is responsible for making sure promises are met.
To do this the Trustee needs to know what income the scheme will require to meet obligations. That is how much it needs to charge in contributions and how much to keep in assets and how well those assets must perform to meet the commitments it has already made and is currently making. There is also strength of the ‘covenant’ or how much employers could stump up, over how long, if things took a turn for the worse.
Promises promises: guarantees are expensive.
How can they know how long you will live? That would be an actuarial matter.
How do they know what inflation will be between now and retirement and then till the pension is no longer payable? How do they know how the scheme’s investments will perform? They can’t, so they make an educated guess with a margin for downside error (prudence). The better the guarantee the more prudent the scheme Trustee will like to be, as this best allows them to say they have carried out their duty to ensure promises are kept; and the more predictable they want the asset performance to be. Predictable, not necessarily good i.e. trustees might prefer a predictable 1% growth over a likely but volatile 5% as this reduces the ‘unknowns’ even if it seems like a perverse decision.
The nature of the promise the scheme makes affects the attitude of the scheme Trustee to how much they think the scheme needs to charge (future service costs), how they should invest our money, riskier potentially high return assets, or safe but dull and in some cases predictably loss making bonds. It can even prompt them to predict that there *could be* a deficit at some point and to charge a little bit more and/or offer a little bit or a lot less in guarantees in the future to make extra sure they can meet the guarantees they already promised.
The net effect of all this is a valuation that it is possible to debate; volatility: the scheme lurches from *theoretical* deficit to *theoretical* surplus; industrial unrest, and, in all likelihood a scheme that is over funded (has more money than it needs to meet promises) in most circumstances, with members having paid more than was required for the pensions they will get, causing intergenerational inequalities.
The tendency has been to not only ensure the scheme is likely to have enough money in most circumstances but to insure against extremely unlikely events, at a cost.
For more on this “Research by Professor Raghavendra Rau of the Cambridge Judge Business School tests USS assumptions on returns against the historical record since 1900”
Conditional indexation: every one’s a winner?
Well, it’s true that if guaranteed indexation is expensive then conditional indexation is cheaper. In its crudest form, if the scheme doesn’t have the money for indexation, it doesn’t have to index pensions so it does not have to charge a premium to insure it can always provide indexation even under adverse circumstances. The scheme can also take a more relaxed view on investment strategy — and in so doing probably make more money (you hope) and therefore pay your indexation after all, possibly even above inflation. At least keeping up with inflation should be likely because periods of high inflation (costly indexation) can tend to coincide with periods of good investment returns.
Arguably (and UCU do argue, a lot) the scheme could actually afford to take a more relaxed view of the investment strategy without conditional indexation because of the long term nature of an open scheme, which is cash flow positive (takes in more at present in a year than it pays out), and backed by a strong multi-employer sector. The idea that schemes must only invest in stolid, predictable items is an orthodoxy for closed schemes that goes along with the debunked idea that DB is dead. Defined benefit is not dead, it’s hanging on fine and would be thriving but for a regulatory environment enthralled to a highly damaging but pervasive ideology. See ² for more on this.
I hope that it’s obvious here that what’s happening if the scheme were to change to conditional indexation, is that the cost of guaranteeing pensions is being offset by shifting some of the risk on to current and future pensioners (that’s you and me).
It’s fairly clear what’s in it for employers. Although all contributions, employers and ours, are part of our wages, the employers are keen to keep that part of the wage bill under control — more predictable and if possible cheaper.
But don’t lower contributions benefit members too?
Yes. But. They don’t benefit employees as much as employers because:
- The split is roughly 70/30, and has been for nearly 50 years So any reduction in contributions benefits employers 2.3 times more than us
- Pension contributions are before tax. A chunk of any contribution reduction goes to tax. I believe in tax, but nonetheless we don’t see as big an increase in take home as the headline change in contributions.
- Almost all of us have a larger income in employment than in retirement, meaning any change in contributions is minimal compared to changes in our pension income when looked at as a fraction of what we have to live off.
For the Trustee it has the potential to remove some of the burden of being responsible for guarantees.
So, why are some in UCU quite keen on it? Because instead of only sharing in the scheme’s downsides — where employers pay deficit recovery, our benefits get reduced, and we pay higher contributions — we would have not only the opportunity but a clear mechanism to benefit from scheme upsides, albeit how this occurs and to what extent is highly sensitive to conditional indexation scheme design (as well as governance and good faith working with employers).
We have just won an historic victory to get some redress for last time our benefits took a hit, but nonetheless, all that did was take us back to where we , after we had already lost our final salary scheme³, paid higher contributions, and been through years of unrest which had been resolved by the lost wages of striking UCU members.
We were right that there wasn’t a deficit, but we also suspect that there is more than enough money in the scheme to pay pension promises. As the scheme exists at present, if it turns out we overpaid there is no automatic way to get that back, having paid more we don’t get a higher pension.
Conditional indexation offers a potential way to reveal surpluses, benefit from the upsides, move to an investment strategy that targets more growth, as well as sharing in the downsides.
Grand designs: the devil is in the details
Conditional indexation raises a lot of questions.
The first of these as alluded to above is how would the scheme decide how much indexation to apply? Which is also related to what is the possible range of indexation, could there be above CPI indexation, as seen in NHS and TPS schemes?
But when is a good time a good time?
That is as mentioned above, it seems simple enough to say the scheme is doing well members get more, when the scheme is doing badly they get less until the good times roll round again when they get more and, if the scheme design and surplus allows, a backfill to catch up again.
You could for example⁴ say, if the scheme is between 95% and 105% funded (on a best estimate basis) members get their indexation. If it’s more than 105% funded then possibly pre retirement members get revaluation+ (inflation + x%) along with the make up any previous lost indexation.
Higher funding would allow all members to get revaluatiion+ and catch up. But if it’s less than 95% something has to happen to correct that, which could be reduced indexation for pensions, reduced revaluation for deferred members, and for those currently paying in higher contributions or reduced revaluation, or a combination of the two. You would hope that at least one benefit of conditional indexation would be that it would eliminate the prospect of reduced future accrual (which we are currently subjected to in extremis) but experience in the Dutch university scheme suggests that if a scheme is unfavourably designed and valued (see below) this spectre can re-emerge.
It is worth noting that even in 2020 using USS’s valuation the scheme was 105% funded on a best-estimate basis, for 2023 it was 127% best estimate funded.
A well designed scheme should be self correcting.
There are a lot of further questions about fairness, trust, and about how any pain or gain is shared out. We’ll come back to those later.
Before we can even get to that, how do we know how well funded the scheme is?
To do that you need a valuation. It is possible to know the current value of the scheme assets, the current income from contributions, and the current promises made. However, to assess how much those promises will actually cost to fulfill and how the value of assets will change, the scheme must use estimates, especially as performance of assets also depends on how they are invested. There are rules about how often a scheme must do a valuation but exactly how it is done is matter for the scheme under the influence of the Pensions Regulator which seems to communicate in a manner similar to the game warmer, warmer, colder.
A lot has been said about the valuation elsewhere and for those who enjoy discussions of Test 1, gilt yields, constraints and discount rates, links to further reading are included throughout for people to get their geek on.
Suffice it to say, a valuation methodology that swings from a projected £14bn deficit to a £7bn projected surplus in 3 years despite the long term nature of the scheme, is highly contentious. A model of an open immature scheme with such a long-term horizon shouldn’t be so reactive to short term market conditions, that it has done might suggest there is a problem with the methodology. Given that CI is a form of gamble — taking an increased risk in the hope of a better outcome- a shoogly valuation is not something you would want or have to bet your future on.
UCU and UUK have repeatedly expressed multiple concerns about the valuation methodology as well as the investment strategy⁵. For expediency the same methodology as was used in 2020 and which produced the deficit, resulting in cut benefits was used in 2023, resulting in restored benefits, from an accelerated timeline. Now that valuation is out of the way, the work continues to try to find a less volatile, more stable, valuation methodology that provides a more realistic model of the health of a long-term open scheme.
If we were to set up CI with the current methodology it would turn on and off far too erratically and instead of reducing industrial tension and anxiety of uncertainty on members, the arguments would increase — is the indexation or lack of it based on a realistic picture of the scheme?
Switching to conditional indexation won’t fix the vexatious valuation issue.
It’s quite clear that a precondition of conditional indexation is that the valuation methodology must be revised first. It must clearly present the best estimate position and then transparently justify the prudence. It would need to be mutually agreeable to the Trustee, employers, and members before embarking on scheme redesign.
Indeed revising the valuation methodology is a separate goal which is desirable in and of itself. It will benefit the scheme, the stakeholders, and industrial relations.
Another question: the scheme is currently valued at least every 3 years, for CI it would seem sensible, even necessary, to index and therefore value the scheme every year but what are the consequences of this?
Ok, so assuming we have an agreed valuation, and a mechanism for triggering indexation what else comes under scheme design?
The next things to consider are the floor and the ceiling (the height of the corridor) for indexation. Related considerations are how fast does the scheme need to correct itself and is that timescale and corridor equitable to a range of members.
Under current legislation, to be a qualifying DB scheme for auto enrolment the scheme must offer revaluation of the lower of:
- the growth in RPI,
- the growth in CPI, or
- 2.5 %
That is a floor between 0 and 2.5% for revaluation of pensions not yet in payment⁶.
Current UK law also sets the same minimum indexation for pensions in payment.
However, if you look at modelling provided by USS to employers (this is just one hypothetical option- not the only way to do CI), they state “UK
indexation legislation would need to change to provide the same flexibility on post-retirement increases as seen in the Canadian model.”
Whilst scheme design would ultimately be a matter for the JNC, this apparently envious nod to the flexibility to award as low as zero indexation that OTTP enjoys is a worrying indication for the level of leeway the Trustee and Exec might desire in order to free up investment strategy and relax the valuation methodology.
Get Sarahcjoss’s stories in your inbox
Join Medium for free to get updates from this writer.
With recent inflation, yikes!
Obviously, were UCU designing a scheme on behalf of members we would require something better than that. Especially if the ceiling doesn’t have the same flexibility to go high.
Lots of corridors, which way should we go?
Let’s imagine some possible corridors.
In corridor one, the meanie corridor, members would get up to inflation in a good year and potentially as low as 0 in a bad year. With say 5 bad years for scheme funding level and inflation running at an average of 4% such that members got >0 and <4% in each of those years, that’s potentially quite the short fall.
Even with the possibility of backfill to make up for bad years, this isn’t really an inviting prospect for members. You get the pension you were promised, or you get less. It would only be remotely appealing if the alternative was scheme closure and that idea is so 2018 darlings, we have moved on.
We’ll talk a bit more about backfill after considering another corridor, one with a bit more headroom for jumping with joy.
Instead of up to inflation, you could have a corridor between the current minimum and inflation +1 or 2% depending on how good a good year was.
By potentially, when possible, giving more than inflation it might make up for some of the money we have lost when the soft cap has been applied and/or when we went from a final salary scheme to a CARE scheme. So there is actually a carrot here.
When combined with backfill, up to the enhanced amount when possible, it has the potential to increase pensions.
At this point I am briefly going to mention the Ontario Teachers’ Pension Plan (OTPP), partly because final salary has just been mentioned. In a final salary scheme, you don’t need to revalue the pensions of members who remain in active service pre retirement. Members earn a pension that is a proportion of their final salary e.g. plucking an example from the air, 40/70ths of their final salary where 40 is years of pensionable service and 70ths is the accrual rate. Instead of needing to revalue you can rely on wages + promotion keeping up with inflation.
The Canadian scheme has a revaluation that is based on increase in wages not inflation. OTPP takes the average of the final five years of your salary at a 1/50 accrual.
Anyone who is even vaguely aware of what has gone on in HE knows that that is not going to work here — indeed the constant erosion of our wages relative to inflation has decreased our salaries and also impacted our income in retirement.
Inflation+ in the context of HE and career average might only bring us back to making up in retirement what was eroded away in employment.
Remember though this carrot still comes at the not inconsiderable acceptance of risk that we might get years of below inflation.
A third, less risky, best of both worlds, option, is that the floor is our current benefits, with soft cap indexation and the only bit that is conditional is when the soft cap is breached, e.g. inflation is 10% we are only getting 7.5% indexation/revaluation. In this scenario between 0 and 2.5% of that could be made up if high inflation coincided with good returns on investments such that there was a positive funding ratio. And/or you could add in that in years where inflation is more modest, say 2.1%, but returns are good, we get a bit on top to take indexation up by +1 or 2% to make it more attractive — after all the money in the scheme is ours, if we are overpaying we deserve more out.
However, before we say Option 3 please, no additional risk, just rewards, we need to go back to why CI might be appealing to employers and comforting to trustees.
Employers want low and stable contributions. Contributions are currently lower than they were and close to what they were early on in the scheme but the cost of providing our current benefits has been higher and may well increase again. Adding CI on top is not going to help that unless something else changes. The current low contributions are partly based on retaining an £8bn surplus in the scheme.
CI is a way of distributing surplus back to members. You can’t both retain something and spend it. And even though the money in the scheme is ours, the employers’ contribution is our deferred wages, they may still take the view that if they have paid in more than was required, they are entitled to some of that back — is there enough money for the same or better than current benefits and lower contributions?
This balance is also part of scheme design. When does money get allocated to employers and when to members in what ratio? How much gets retained in the scheme as increased assets? If a really big surplus emerges does the scheme pay out a bonus? And how do we avoid this becoming an argument? How do we ensure it’s fair?
Let’s save what to do about deficits for later.
We did mention revising the valuation methodology and that might reveal a scheme healthy and stable enough for improved benefits and low predictable contributions. It might. It would certainly be interesting to run any proposed alternative method back over historical data to see how it compares.
What about changing the investment strategy? We are trying to get a more positive split towards growth seeking (and more ethical) assets. However, see above, trustees are by the nature of their duties likely to be cautious and risk averse and to listen to the advice of the scheme executive. If they are going to take more risk with investments they are likely to want to trade that against leeway elsewhere that is unlikely to be satisfied by option 3 — costly guarantees + optional extras. They probably won’t move that far without a compelling reason.
Of course, if the gamble pays off, a higher proportion of growth seeking assets coupled with a best estimate valuation should mean the scheme can build up a big cushion, bad years are few, and it might be possible to have higher benefits, low contributions, and a trustee and regulator who are satisfied they have only guaranteed things they can deliver.
But a gamble is still a gamble.
It’s better than a good time for making up
Supposing a mutually agreeable scheme design comes out something like option 2. Revaluation (pre retirement) varies between the current auto enrolment minimum and a target revaluation of inflation +1.5%. Indexation (in retirement) varies between the current statutory minimum and inflation. For any year where the scheme did not achieve target revaluation & indexation, it can catch up on future- backfill.
Imagine a run of 4 bad years inflation (target is shown in brackets):
This is a disaster scenario. But imagine something like this did happen, it’s not likely that the next year will be so good that the scheme can offer not only target revaluation and indexation for that year, but also to reinstate pensions at the level they would have been with the compounded inflation they missed out on.
It’s more likely to take several years and for those several years pensioners will be getting less pension — so arguably they should get made good first. The OTTP table for indexation awards 2008–2023 shows catch up was needed in 6 years for those in retirement. Should they also get priority when it comes to divvying up the reduced indexation? Do they get paid back the money they were short by for the lean years? Or only brought up to the current value of the original pension income from now on? More decisions for scheme design.
Making good pre-retirement pensions is just a paper exercise of revising promises that will be called in later. It does, however, increase scheme liabilities, impacting subsequent valuations.
But what if you were to retire after or part way through a run of bad years? Given that post retirement you might only get indexation, not revaluation+, the scheme design would also need to account for this to mitigate against some members retiring with devalued pensions that won’t catch up.
Sharing the pain
At the moment, when the scheme goes into deficit, deficit recovery payments are taken. That is additional contributions are levied on top of the cost of future service costs (buying pension promises).
This has raised issues of intergenerational fairness because whilst the liabilities include the cost of paying all pensions when the fall due: pensioners, deferred members, and active members; the cost of ensuring there is sufficient money to pay out falls only on active members and their employers, impacts the wage bills and therefore pay of those currently working in HE. They are paying not only an increased cost for their own pension but also paying for that of their predecessors.
A hope for CI is that there won’t be a deficit, in the CI part of the scheme at least, which will use a best estimate valuation.
Setting up CI: When two become one
This leads into how do you even set up a CI scheme? One option is to keep the current scheme open, but make indexation on all accrual going forwards conditional and the two sides of the scheme share assets, to avoid both the current scheme closing with all that entails and the new scheme starting with no assets.
When the hypothetical CI scheme opens, all benefits accrued will be the current type with guaranteed indexation, with the proportion of CI in any members pension increasing over time, such that those close to retirement will have almost entirely traditional benefits and those who joined the sector recently ending up with a much higher proportion that is conditional — with possible up and downsides.
There is the likelihood that one scheme will be cross subsidising the other at times, either in assets or contributions but it won’t necessarily be that transparent where any shortfall originates from. However, supposing it emerges that the scheme as a whole is a little short, this can be rectified by not paying indexation. But why should current members lose out in order to guarantee existing pensions and/or to hold down contributions?
One way to help get the scheme back on track faster is to pay deficit recovery contributions (DRCs) and/or increase contributions any time that the scheme fails to meet target indexation. As members are already taking a hit to their benefits, and the shortfall may be for pensions earned years ago, it seems only fair that employers share the pain and foot the bill for DRCs.
A system which matches reduced indexation to increased employer contributions, not only shares the pain but might serve to disincentivise employers from extracting too much surplus from the scheme or setting contributions unrealistically low in the belief that if there isn’t enough money to pay indexation that’s no longer their problem. This is the mechanism for OTTP.
This has already got really quite long, and in so doing if nothing else serves to illustrate quite how much there is to consider, even at this exploratory purely theoretical stage. Embarking or not on a CI scheme would be a matter for scheme members to decide (not the SWG). Were we, the members ever to go down that route, given this would be our futures we are talking about, it would be vital to do it well; with clear rules, all the questions thought through and resolved, and adequate fail safes built in. Even then, what’s to stop the rules being changed again? (Pickets)
It also illustrates, given that the valuation needs sorted first and then all the designs, that any suggestion that this could be implemented for the next valuation is entirely unrealistic.
It’s a model and it’s looking good, I’d like to take it home that’s understood
We don’t need CI anymore, sounds like a faff, why are UCU negotiators even discussing it, wouldn’t it be better to focus on sorting out the valuation?
Well, other than we are pension geeks who love looking at models and thinking about rules⁷ , reasons why it makes sense for UCU to be in those meetings include:
- UCEA (who recently replaced UUK) will be having meetings with USS about CI with or without us. We need to be there to make our objections to schemes designs like option 1 very clear and to avoid having a bad scheme cooked up and imposed upon us.
- Those meetings are an opportunity to request prospective and retrospective modelling that might not otherwise be forthcoming. Including requesting a modelling of current benefits + CI above the soft cap and best estimate with growth assets. The usefulness of such models is not restricted to thinking about CI but could reveal truths about the scheme as it is and help inform improvements to the valuation methodology.
- Whilst we remain sceptical about CI (SWG report), knowledge is power and it is important to consider a range of ways in which we could improve member benefits, increase stability, and distribute surplus.
HE12
So to HE12 and amendment(s)⁸. This motion is not about making a decision on CI yes or no, instead motion 12 calls on negotiators to cease working on CI. It also states in point b that “CI is more risky to members than DB and will not improve pension benefits.”
Whilst I agree and hopefully have made clear in this article, it is more risky to members, it is not fair to say it will not improve member benefits. It may not. It will likely, in order to ‘free up’ the scheme, reduce the level of guaranteed benefits but could potentially provide a route to realise increases. It depends on how much you want to gamble your future.
However, any decision on ruling CI in or out would be for members to make an informed decision knowing what is on offer. At the moment we are nowhere near that, and may never get there. The SWG report recommendations include remaining sceptical but engaging.
I am not advocating for CI.
But I do think it is important for negotiators to be in the room, and to find out as much as we can about how the scheme would perform when looking at historical data through the lens of different models from the flawed ones that were used and which contributed to the recent turbulence.
Therefore, I am against HE12 unamended, and would have spoken against it at Conference. Better to stick with existing policy which mandates negotiators to explore CI. No more, no less.
I don’t mind amendment 12A1 from HEC. It captures the scepticism that I feel about CI whilst keeping us in the room even if it doesn’t correct the quibble with part b.
On the Sheffield amendment, I can see why CBC have ruled that it materially changes the motion and it is currently ruled off the agenda. If it were ruled back on, worries about the precedent this sets for wrecking amendments aside, I’d need to hear the arguments before deciding. Possibly just leaving existing policy in place is a more satisfactory route.
In summary:
Conditional indexation could increase benefits and/or keep contribution rates more stable by giving trustees more confidence to invest for growth and moderate their prudence. However, this is likely to come in exchange for members accepting more risk.
CI won’t fix a valuation but fixing the valuation first would be an essential precondition.
CI might not be the only way to free up investment strategy and valuation technique.
There is no single set way to set up a CI scheme, there are lots of variables. Designing a scheme with enough protections for members would be a huge undertaking.
Meetings on CI are taking place and UCU can gain useful insights by being in the room without commiting to CI, which could only occur after a decision by members.
I am against HE12 unamended. Qualified support for HE12A1. It’s definitely better than unamended.
B25 on the fence and not keen enough to suggest challenging CBC to order it on when existing policy would do just as well.
And finally, I am standing for re-election and would appreciate it if you would vote for me and for Jackie Grant as well as all of the other current negotiators, Donna & Marion, who are standing. It’s been an absolute pleasure and an education to work with them and with Mark, Deepa and Dooley for the last year, and a privilege to represent UCU and scheme members.
Footnotes:
1 See Scheme Rules, point 17.4
2 in particular Derek Benstead for the Work and Pensions Select Committee’s evidence on DB schemes, Mike Otsuka The case for a funded pension with a Defined Benefit and USS CEO Carol Young in her letter to TPR on their Statement of Strategy.
3 More on final salary https://centaur.reading.ac.uk/62984/1/1-s2.0-S0167668715301189-main.pdf
4 caveat: this is just an example for illustrative purposes, based loosely on the Dutch scheme, and in no way a concrete suggestion for how to actually design a scheme
5 concerns about the valuation (see UUK’s actuary AON here in 2020, and here in 2021, and UUK in 2023 here). It was also critiqued by the JEP, report 1 and report 2.
6 See The Pensions Regulator for rules for auto enrolment schemes https://www.thepensionsregulator.gov.uk/en/document-library/automatic-enrolment-detailed-guidance/4-pension-schemes-under-the-employer-duties#xd_co_f=ODBiNDk0OTktMTFhMS00NGY2LThkNGItYWMzNzRjZGZhNzU2~
7 Never gonna tell a lie
8 UCU HE conference motions HE 12, HE 12 IA and the amendment B25 currently ruled out as materially changing the effect of the motion https://www.ucu.org.uk/circ/html/ucu2134.html
