There cannot be a university teacher in the land who is not pleased to hear news that their pension scheme is in rude health.
Not only is the DB plan that provides the vast majority of retirement income to the members of USS in a good state, but the DC top-up plan is reported by Naomi Clark -responsible for its investment – as being the second top performing DC plan in the UK. Since the DC plan draws heavily on the assets of the DB plan to provide members with growth, these two items aren’t coincidental; they amount to a good news story for all involved.
Yesterday’s headline numbers were promptly reported by the FT’s Jo Cumbo
NEW: The giant #USS pension plan has surged further into the black, reporting a £7.6bn surplus at the end of March.
In 2020, the scheme reported a £14bn deficit. pic.twitter.com/hTwbveiLY5
— Josephine Cumbo (@JosephineCumbo) May 18, 2023
On the swing to a £7.5bn surplus from a £14bn deficit three years ago, Bill Galvin #USS chief said the signs were “very encouraging” for the current valuation. pic.twitter.com/giFzg8NkFV
— Josephine Cumbo (@JosephineCumbo) May 18, 2023
This turnaround has come at a price. The £14bn supposed deficit gave rise to cuts in expected pensions which are now being reversed. But in the meantime, much damage was done to the educational establishment and to the education of a generation of students.
In 2021, the #USS defended its decision to undertake the 2020 valuation during a pandemic-driven market crash.
The 2020 valuation identified a £14bn funding hole, with this deficit precipitatiing retirement benefit cuts for tens of thousands of active savers. pic.twitter.com/JWAd5vUbPp
— Josephine Cumbo (@JosephineCumbo) May 18, 2023
The decision to press ahead with a valuation of scheme assets and liabilities at the worst possible point to use a marked to market approach, now looks even more crazy than it did in 2021.
It would be easy to consider the current picture as rosy and forget about the strikes of the past five years. That would be the kind of closure the current management of USS would like.
But it is no closure for those who went on strike and those who missed lessons. Some of the impact of the recent work to rule on marking are still to be felt.
Lessons need to be learned from the debacle in industrial relations occasioned by the valuation process between 2017 and today. Over the next few days, I hope to harness the considerable analytical power of some of those who have been in the scheme and some who have advised around the outside, to help get a clearer understanding of what those lessons can be.
