I am not smart enough to add much to the academic debate pursued by Professors Michael Bromwich and Dennis Leech , the venerable Con Keating and the scholarly Woon Wong. Readers looking for the views of Ros Altmann can find them in her comments to Con’s article
All that I can do is make a call for a simplification of the debate – so that what comes out it makes sense to the hundreds of thousands whose retirements depend on USS making the best of it.
What should be done.
For me, the key takeaway from all this debate on USS is that someone needs to set out clearly what the objective of the scheme funding is to be.
Then USS can decide what investment strategy is to be used. The strategy needs to be focused on that that objective. Only when it has its investment strategy, can the USS decide how to manage its risks especially the investment risk.
This work needs to be done first and only then can USS consider how prudent its discount rate and funding needs to be.
This discount rate needs to support the investment strategy and take account of the ability of the sponsors to deal with the risks of the agreed contribution rate.
There is no legal requirement to protect the PPF. If the government ever feels it necessary to prescribe elements of scheme funding to protect the PPF, they can change the law.
Similarly there is no legally prescribed definition of prudence.