Sam Marsh doing the day job
Sometimes twitter throws up a thread that draws you from tweet to tweet in a way that a long blog can’t. This thread from Sam Marsh is an example. It is an exercise in controlled fury at the ineptitude of the USS 2020 valuation and the consequences it is creating. I’ll leave you to enjoy Sam’s journey as the thread unravels.
Let’s talk about the non-existent 2021 valuation, that could have been invoked by @USSpensions as a solution to the crisis that the scheme and pre-92 HE sector is heading towards. (This is an overdue thread.) 1/
— Sam Marsh (@Sam_Marsh101) September 3, 2021
At the valuation date, the scheme’s assets had plummeted from around £73bn at the end of December 2019 to £66.5bn. By 31 March 2021 the assets had recovered to £80.6bn, and market conditions were widley seen as more ‘normal’. (Most recent figure? £88bn) 3/ pic.twitter.com/iuP6z9Wqa8
— Sam Marsh (@Sam_Marsh101) September 3, 2021
The issue is the valuation of the liabilities, which is based on a complex calculation with many moving parts. @USSpensions‘ assessment of the March 2021 position is that the deficit has indeed receded significantly, but is still around £5-7bn due to much higher liabilities. 5/
— Sam Marsh (@Sam_Marsh101) September 3, 2021
That word ‘prudent’ is super-important! On an unbiased estimate of the future investment returns (i.e. one that’s equally likely to be too low as too high), the scheme doesn’t have a deficit, even as at 31 March 2020, and certainly not a year later. 7/
— Sam Marsh (@Sam_Marsh101) September 3, 2021
One way to see this is by looking at where the discount rate sits on the distribution of projected investment returns from #USS‘s model. In 2014, #USS used the 65th centile. In 2017 and 2018, the 67th. In 2020, it was somewhere around 80-90th centile. 2021? Around the 75th. 10/
— Sam Marsh (@Sam_Marsh101) September 3, 2021
It is clear from this table that the discount rate assumption is bumping around at its lowest ever level in the 2021 calculations that #USS have released. And I don’t think it’s possible to over-estimate how much of an effect small tweaks to the discount rate can make! 11/
— Sam Marsh (@Sam_Marsh101) September 3, 2021
So forgive me if I struggle to believe #USS‘s claims (repeated by @UniversitiesUK) that the 2021 valuation doesn’t present an improved position for the scheme. It should, and it would under reasonable valuation assumptions. 13/
— Sam Marsh (@Sam_Marsh101) September 3, 2021
I will try to write this stuff up properly at some point, as it’s too central to the brewing dispute to allow #USS to make such claims unchallenged. The document that contains USS’s argument and figures is below. Please do scrutinise! 15/15 https://t.co/hGm5vrRiNw
— Sam Marsh (@Sam_Marsh101) September 3, 2021
PPS I’ve just seen that @nm_davies beat me to it on this subject! It’s almost as if spending most of the week in in furiating JNC meetings leads you to miss out on Twitter… https://t.co/ElZ1t5giv9
— Sam Marsh (@Sam_Marsh101) September 3, 2021