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USS pensions: UCL’s response to USS’s further consultation on option 3

17 July 2019

Thank you for sharing your views with us on USS’s further consultation on concluding the 2018 valuation in line with option 3. UCL Council has now considered all the feedback received and has submitted its formal response to UUK. 

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USS’s first consultation on their three proposed options to conclude the 2018 valuation took place at the end of May and following feedback on the options at the start of July UCL confirmed its qualified support for the option presented by USS that would involve a lower level of increase from this October than was currently scheduled and would bring forward the next valuation to 2020.

UCL Council supported that option (option 3) on the basis that it offered the best opportunity for the Joint Expert Panel to complete its work and for its recommendations to be implemented; most employers also supported this option. 

The recent consultation asked employers if they would support a package of measures to allow the USS trustee to continue to assess the covenant of the employers as ‘strong’ and therefore conclude the valuation in line with option 3.   

Council considered this package of measures, together with your feedback, and has now approved the following response that has been submitted to UUK:

UCL Council is prepared to support the package of proposed measures in principle, subject to a satisfactory outcome to the more detailed consideration of the request for security on a pari passu basis. We would expect, specifically, that this would not apply to project finance, other types of debt secured on cash flows (as is frequently the case with halls of residence) and asset leasing. We would also expect this requirement to be time-limited, perhaps to the end of the 2020 valuation. 

UCL Council continues to fully support the Joint Expert Panel, which is due to report on the second phase of its work in September and we hope that it will provide recommendations that, amongst other things, address the concerns raised by our staff and others regarding the valuation methodology.