The USS Joint Negotiating Committee meeting has continued today after a full day of discussions yesterday. After threatening to impose the proposal on the 18th December, negotiations will continue now till 23 January, meaning the negotiation team has won a small battle. A decision will not be taken by UUK until after the result of the strike ballot – and it may well be our threat of sustained strike action which has made them pause for thought, so this makes it ESSENTIAL that we get as many votes as is possible in the ballot.
The employers have now prepared modelling of what pensions would look like following the proposed changes. The link is here –http://www.employerspensionsforum.co.uk/sites/default/files/uploads/aon-hewitt-modelling-proposed-uss-benefit-changes.pdf. Page 3 is the good one, but do read through carefully. You’ll see that in every single example, the projected annual pension income, for any group, is significantly less than it would be on the current basis. And remember that this is the document commissioned by UUK, in support of their argument. In addition, their analysis includes your state pension and this has the effect of superficially reducing the impact.
Worse still for their argument, the base calculations that they’ve used are not the same ones as have been used by USS to model the pensions going forward for the benefit of the pensions regulator – they’re better figures. In other words, UUK insisted on sticking to a valuation of the pension scheme which they’ve claimed makes it unworkable: but they have then used different figures to predict what your pension would be if they managed to force through their changes – and the final outcome is still startlingly bad…. Mike Otsuka of LSE has put up a new blog post which analyses the analysis – https://medium.com/@mikeotsuka/uuks-actuary-s-best-estimates-eliminate-the-uss-deficit-33dad2afc24b
and his conclusion is that if the (better) figures used by Aon in the analysis above were to be applied to the overarching fund, then there is no deficit! He writes:
‘Remember that modelling by UUK’s actuary which is meant to show how well we’ll do under their proposed shift to 100% DC? It turns out that if that actuary’s same rosy picture of investment returns is applied to the valuation of the DB pension scheme, there would be no need to shift to DC in the first place!’