The following consists of links to updates on Cambridge’s and Oxford’s influence on USS:
Further evidence has come to light of coordination between Cambridge University and its Colleges to call for:
· Rejection of the level of risk that the Universities Superannuation Scheme (USS) proposed in the September valuation
· Strong support of the sectionalisation of the scheme
· Capping of the employer contribution at 18%
· Immediate movement towards much greater DC provision, even if short of 100% DC
There have been discussions between Colleges’ Pension Committee and the University to formulate a co-ordinated response from Cambridge. The key elements of the suggested position are:
1. We want less risk to be taken, acknowledging the implications this might have for benefits.
2. We note and strongly support the University of Cambridge’s view that the current arrangements result in subsidies between the stronger and weaker balance sheets in the HE sector which distort competition, and may be encouraging over-enthusiastic lending to some parts of the sector. There is an argument in favour of the Trustee Company systematically scrutinising. The Regulator’s recent letter seems to require Employers to move on from the assumption that the Sector’s long term creditworthiness is beyond doubt and can only serve to reinforce the concerns of the stronger covenants about the degree of cross-subsidisation. We are very strong advocates of sectionalisation of the Scheme, certainly for future service and if possible also for the past service deficit.
3. We believe that 18% should be the maximum for the employer’s contribution.
4. As an absolute minimum there seems no way of avoiding a substantial move in the mix of DB and DC towards much greater provision of DC with immediate effect.
5. If the outcome for employers at this valuation is a mandate to seek a DC-only solution to future service benefits we support the University of Cambridge’s view that following should be taken into account in the design of the scheme:
a. Protection benefits should be a key consideration (i.e. death in service, ill health, incapacity) as these are highly valued by most employees;
b. Greater flexibility both in terms of level of contributions paid by employees and how employees are able to access their benefits;
c. Greater flexibility for employers to decide how pensions fit in with other benefits in a total reward environment.
FURTHER UPDATES on Cambridge and Oxford:
Sam Dolan tweet thread on Pembroke, Oxford (20 March)
This post is a follow up to these earlier posts: (1) ‘Oxford’s and Cambridge’s role in the demise of USS’, (2) ‘Cambridge Colleges coordinated a rejection of USS’s proposed level of risk’, (3) ‘The rotten boroughs of the Isis and the Fens’.