UUK response to USS 2020 valuation report

3 Mar 2021

A spokesperson for Universities UK, on behalf of USS employers, said:

“The very high prices for current benefits put forward by the USS Trustee are unaffordable for employers, risk pricing even more staff out of the scheme, and undervalue the collective and enduring financial strength of the participating employers.

“Employers understand that the USS has a sizeable deficit and that a high number of staff on lower grades opt out because the contributions are too expensive for them. It is important that USS is designed so that people in early career can also access an affordable pension. This means it is vital that contributions to the scheme are affordable and sustainable for staff and employers alike and that reform is necessary.

“However, employers and scheme members need a stronger and clearer justification from the USS Trustee for the very high pricing decisions. Without this justification, employers and scheme members will be concerned that the scheme is facing an unnecessary level of reform.

“There has been a three-month delay in the USS Trustee confirming the price of current benefits, while it has had discussions with The Pensions Regulator. The USS Trustee has now set out higher prices than it previously thought necessary and it appears to be taking a more cautious approach than employers and our actuaries advise is needed. 

“Employers and their staff need significant reassurance that the USS Trustee is not being overly prudent on matters like projected investment returns or undervaluing possible covenant support measures, both of which remain under discussion.”



  • The prices that the USS Trustee has set for current benefits are well above the levels of affordability for employers and scheme members, who are at risk of being priced out of the scheme.
  • The assumptions used by the USS Trustee seem to seriously undervalue the collective and enduring financial strength of the university sector, which includes some of the world’s leading universities.
  • If the deficit recovery contributions proposed by the USS Trustee under the ‘as is’ scenario were paid from current contribution rates, the amount left for future pensions would be at a similar level to a minimum auto-enrolment scheme.
  • Employers are disappointed with the value that the USS Trustee has placed on UUK’s illustrated covenant support package, which was developed in line with the USS Trustee’s ask to mitigate risks over employers exiting the scheme, and rising levels of debt in the higher education sector.
  • Employers have already gone a long way on offering covenant support; UUK’s illustrated measures grant USS equal creditor status on significant secured borrowing and provide a moratorium on employers being able to exit the scheme without the USS Trustee’s consent.
  • To date the USS Trustee has not yet provided a clear and reasoned justification for its rejection of UUK’s illustrated measures, or the much higher levels of covenant support it says are needed. It is entirely within the gift of the USS Trustee to determine that the package suggested by UUK secures a strong covenant rating as employers believe it should.
  • At the close of the 2018 valuation, the USS Trustee raised concerns in relation to covenant following Trinity College Cambridge’s decision to buy-out of the scheme. For some reason, the USS Trustee has placed considerable, and we believe wholly disproportionate, weight on this one employer leaving the scheme. We are not aware that any other employer has any desire to leave USS, both because they are committed to a portable pension scheme that benefits employees and because the costs of leaving are unaffordable.