The 5th recovery plan of USS:

The first time as tragedy; the second time as farce

Michael Otsuka
3 min readMay 31, 2022

“Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.” — Karl Marx, The Eighteenth Brumaire of Louis Napoleon

USS issued its 2020 valuation recovery plan in draft form in September 2021. At that time, it struck many as a calamity that employers and members were being called upon to bear the cost of deficit recovery contributions of at least 6.2% per annum to recover a huge £14.1bn deficit that had been recorded way back on the last day of March 2020. This date fell near the depths of the stock market crash induced by the onset of Covid. By the end of September 2021, that deficit had already shrunk to £3.2bn — less than a quarter of its size in March 2020 — mainly on account of the sustained recovery from the Covid dip of more than £20bn in the value of the assets.

By the time this recovery plan was finally signed on 28 March 2022, matters had descended into farce, since we have now learned that, as of three days later (the 31st of March), the deficit had halved since September, down to £1.6bn.

£1.6bn might sound like a lot of money. But it’s a small gap between two large numbers of £88.8bn in assets and £90.4bn in liabilities. By the more informative measure of the proportion of the assets relative to the liabilities, the scheme was 98% funded as of 31 March 2022. It is therefore unsurprising that, as of that date, no further contributions are required to recover the deficit, once one incorporates the modest reduction in their excessive prudence that USS has built into their method of calculating the required deficit recovery contributions.

Nevertheless, the recovery plan remains calibrated to the £14.1bn deficit recorded at the depths of the Covid crash, even though it does not take effect until two years later. We are therefore confronted with the spectacle of a declaration that costly steps — contributions of at least 6.2% of salaries — must be taken from 1 April 2022, in order to recover a deficit that had vanished into insignificance by the previous day of 31 March 2022:

USS 2020 valuation Recovery Plan, signed on 28 March 2022

Note that the above recovery plan states that it may be revised prior to the next valuation: “This recovery plan will be reviewed, and may be revised, following the Trustee’s next valuation under section 224 of the Pensions Act 2004, or earlier if the trustee so determines.”

Moreover Regulation 8(5) of the Scheme Funding Regulations states that a “recovery plan may be reviewed, and if necessary revised, where the trustees or managers consider that there are reasons that may justify a variation to it [emphasis added].

The funding position of the scheme at the time the recovery plan was signed into action surely provides reasons that justify its replacement with one that reflects the fact that the deficit had shrunk to such an extent by that date that contributions are no longer required to recover from it.

See this blog for more details:



Michael Otsuka

Professor of Philosophy, Rutgers. Previously on UCU national negotiating team for USS pensions.