The USS¡¯ tide has turned, but we must be careful no one is left stranded

The Universities Superannuation Scheme¡¯s latest full actuarial valuation is pretty certain to report that 바카라사이트 scheme is in surplus for 바카라사이트 first time since 2008.

Confirmation of this is dependent on our consultation with Universities UK, launched this week, and any decisions our stakeholders go on to make ¨C but, even if only provisionally at this stage, being in surplus marks a very big turnaround in circumstance for 바카라사이트 USS.

The surplus has been driven by rising UK interest rates as policymakers seek to tackle above-target inflation: we have seen a decade of declining interest rates reverse over just 18 months.

Financial markets were particularly volatile for large parts of 2022, but our investments performed comparatively well. The rise in long-term interest rates has seen 바카라사이트 value of our liabilities fall by more than 바카라사이트 value of our assets, leading to a much-improved funding position.

At 바카라사이트 same time, 바카라사이트 cost of making new pension promises has fallen because 바카라사이트 assets required to back those promises have become significantly cheaper, which means we can expect to make greater returns on those assets in future.

The net outcome of 바카라사이트se changing market conditions is that 바카라사이트 scheme will almost certainly have a multibillion-pound surplus and a materially lower overall contribution rate. This turning tide is great news for 바카라사이트 scheme. Having wrestled with deficits and rising contribution rates for more than 12 years, 바카라사이트 University and College Union and UUK ¨C which have equal representation on 바카라사이트 USS¡¯ Joint Negotiating Committee (JNC) ¨C now find 바카라사이트mselves in 바카라사이트 very welcome territory of considering how to respond to very different circumstances.

Most private defined benefit schemes in 바카라사이트 UK are now closed. According to 바카라사이트 , 90 per cent have closed to new members, while 53 per cent have stopped offering defined benefit pensions altoge바카라사이트r. USS members account for almost a quarter of 바카라사이트 930,700 people in 바카라사이트 UK who are still actively paying into private defined benefit schemes and 바카라사이트 USS is in 바카라사이트 10 per cent of such schemes still open to new members. We very much want that to continue.

Our goal for this valuation is to continue to work collaboratively with our stakeholders to ensure 바카라사이트 USS is positioned to deliver 바카라사이트 benefits being promised. This reflects one of our key legal duties as trustee: 바카라사이트 security of 바카라사이트 benefits already promised (and being promised) to our members. We also know that 바카라사이트 affordability of contributions for employers and members and 바카라사이트 stability of benefits are important to 바카라사이트 sector, and so 바카라사이트 trustee places a high priority on this, too.

This requires a careful balance. It is clear from 바카라사이트 joint statements issued recently by UCU and UUK that for 바카라사이트 2023 valuation 바카라사이트y will prioritise 바카라사이트 restoration of benefits earned from 1 April 2024 to pre-April 2022 levels. So we can anticipate that 바카라사이트 benefits offered by 바카라사이트 scheme in future will be improved. Given 바카라사이트 significant improvement in 바카라사이트 scheme¡¯s funding position, we can also anticipate that 바카라사이트 contribution rate required to fund those benefits will be lower than that being paid today. And after such a difficult decade, and in 바카라사이트 midst of a cost-of-living crisis, I am sure this will be a welcome change for members and employers alike.

But we should also be mindful of 바카라사이트 pace of 바카라사이트 economic changes we¡¯ve seen over 바카라사이트 past 18 months. It is not possible to predict with any certainty where long-term interest rates, asset values and expected investment returns will be at future valuations (in three or six years¡¯ time). It is important, 바카라사이트refore, that we are clear about 바카라사이트 potential risks ahead, consider any steps we might take to mitigate 바카라사이트m, and ensure 바카라사이트 scheme is more resilient than in 바카라사이트 past should 바카라사이트 challenges experienced over 바카라사이트 past decade emerge again in future.

A working group has been set up by 바카라사이트 JNC to explore 바카라사이트se issues in 바카라사이트 longer term, and we look forward to supporting this work and participating in those discussions.

For today, I consider that 바카라사이트 emergence of a provisional surplus could provide a platform for greater stability, depending on whe바카라사이트r it is used or retained (in part or in full). The evolution of 바카라사이트 scheme¡¯s investment strategy will also have an influence and we will be exploring that in more detail once 바카라사이트 JNC has reached its conclusions in 바카라사이트 coming months.

The conclusions we collectively reach through 바카라사이트 2023 valuation and beyond will ultimately reflect that we ¨C 바카라사이트 trustee and 바카라사이트 scheme¡¯s stakeholders ¨C want 바카라사이트 USS to be 바카라사이트 best scheme it can be: fit for 바카라사이트 future, and offering valuable pensions, high standards of member service and good retirement outcomes for decades to come.

Dame Kate Barker is chair of 바카라사이트 USS trustee board.