Michael Otsuka Profile picture
Sep 3, 2018 18 tweets 7 min read Twitter logo Read on Twitter
Consultation on #USS contribution increases opens today. Their website is now live (link). Some differences, on which I comment below, between what's on the website & what's in the hard copy consultation document that we've received in the post. 1/
Here's a link to a pdf of the hard copy consultation document we received in the post. 2/
In this tweet, I noted my surprise over the following in that document: 3/
The above claim that "feedback could result in changes to benefits" is not repeated in any of the online material. I infer that this surprising claim was misleading and that's why #USS does not repeat it. 5/
There is another change of wording on the website, having to do with the role the Joint Expert Panel (JEP) might play. In a previous tweet, I drew attention to the following passage in the hard copy document: 6/
I see that in the linked Q&A on the JEP, #USS has removed "and/or contributions". The role of JEP is instead described as follows: 8/
"Based on the JEP’s findings, the JNC may propose changes to benefits which, subject to due diligence by the trustee, would then be subject to a further consultation by employers with affected employees and their representatives." 9/
The "...and/or contributions..." phrase is, however, retained in the following section of the consultation website: 10/
Significantly, however, "benefits and/or contributions" has been removed from #USS's most detailed description of the role of the JEP in their new online material. 11/
This is how #USS described the role of JEP in the hard copy consultation document they posted to scheme members last week. Note highlighted phrase. 12/
There is a subtle but potentially change of wording to the analogous passage describing the role of JEP in the new online material. The phrase "changes to benefits and/or contributions" has been replaced by the more ambiguous phrase "scheme changes". 13/
A change to contributions rather than benefits might constitute a "scheme change". But note that #USS no longer mentions the possibility that the trustee might consider a JEP/JNC recommendation consisting of only a change in contributions, unaccompanied by benefit changes. 14/
#USS appears, therefore, to be signalling the following: Even if, upon assessment of the valuation, JEP concludes that no detrimental changes to the status quo are required, either in the form of a cut to benefits or an increase of the current 26% contribution level,.... 15/
...they will not accept a proposal involving no detrimental changes to the status quo. Rather, any proposal must include either a cut to benefits or an increase in contributions, relative to the status quo. 16/
This strikes me as a pre-judging of the results of the JEP review. It is, for example, to rule out, in advance, that @Sam_Marsh101's findings demonstrate that a proper application of Test 1 is consistent with no detrimental changes (see link). 17/17
PS: A new linked #USS post on "The valuation and the JEP", dated 4 Sept, says "and/or contributions": "[In December] The JNC may decide on any future changes to benefits and/or contributions...."

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More from @MikeOtsuka

Oct 6, 2018
.@UCL_UCU has responded on Twitter to my linked blog post "Questions for advocates of No Detriment". Below I expose two problems with their response. 1/
In that blog, I ask: "Do you think union members would vote to authorise a strike for a No Detriment elimination of their 1.1% rise for three years rather than accepting the JEP-modelled solution?" 2/
.@UCL_UCU's rejoinder is that they are proposing a negotiation of a No Detriment elimination of any rise in contributions, not only of the modest 1.1% over the next three years, but also beyond that three year period. 3/
Read 18 tweets
Oct 3, 2018
.@UCL_UCU branch officers reveal that they misunderstood an important aspect of the JEP report when they pushed for their No Detriment motion today. In the embedded tweet, they write that JEP "don't refer accrual rate to JNC": 1/
In my subsequent exchange with @UCL_UCU that begins with the embedded tweet, I demonstrate that it is just as clear that they refer accrual rate to JNC as that they refer cost-sharing to JNC. 2/2
Read 5 tweets
Oct 3, 2018
A query for @UCL_UCU regarding their tweet below: 1/
If employers call for a cut to DB accrual from 1/75 to 1/80 in order to keep employer contributions down to 19.3% on a 65%/35% employer/member cost-sharing basis, would that also be consistent, in you view, with acceptance of the JEP recommendations in full? 2/2
Here I elaborate on my above query, in an email to @UCL_UCU President Sean @SeanAWallis or anyone else who would like to respond:
Read 5 tweets
Oct 3, 2018
It has been over a month since @Sam_Marsh101 submitted his Addendum to the JEP and #USS. If he's right, the current valuation contains a significant, hidden layer of prudence ABOVE AND BEYOND the following that JEP lists here: 1/
I say more about the significance of Sam's Addendum in this blog post, where I also explain why #USS and @GuyCoughlan owe us an answer to Sam's findings. 2/
I believe that, so far, this is the only response @Sam_Marsh101 has received: 3/
Read 11 tweets
Sep 29, 2018
🚨💣😱.@Cambridge_Uni's response to a 2016 consultation re strength of the #USS covenant has recently been released via FOI. Cambridge disputes PWC's finding of a strong covenant over 30 as opposed to merely 20 years! The following statement in their response is a bombshell: 1/
"We would be concerned if the increase in visibility of a strong covenant was used to support a less prudent approach to the 2017 valuation than that adopted in 2014, either in terms of the assumptions adopted or the time horizon for de-risking." 2/
We are all aware that tPR's challenge, in their Sept 2017 letter, to the PWC/#USS assessment of the strength of the covenant, wreaked havoc on our DB pension and helped explain the shift to the more conservative November valuation. 3/
Read 25 tweets
Sep 26, 2018
JEP RECOMMENDATION #3: Smooth the cost of future service contributions over at least the next 6 years. As this chart indicates, this would reduce contributions by 1.5%. 1/
#USS's failure to smooth the cost of future service contributions constitutes a significant hidden layer of prudence. See this blog post: 2/
...and this blog post: 3/
Read 8 tweets

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