Universities Superannuation Scheme, London, should increase the total contribution rate to only 29.2% to fund benefits, from the current 26%, according to the first independent assessment of the fund's valuation by an expert panel.
The panel was set up by the University and College Union and higher education employers' representative, Universities U.K.
According to the current proposal by USS, the contribution rate will increase to 36.6% starting April 2020, based on the current valuation of the £60 billion ($77.7 billion) pension fund for U.K. academic staff.
In March 2018, UCU and Universities U.K. set up a joint expert panel to review the USS valuation processes and methodology to establish a future joint approach to the valuation of the pension fund.
The analysis conducted by the expert panel highlights areas where changes would have a material impact on the valuation and subsequent contribution rate increases, UCU said. The recommendations included a re-evaluation of the employers' attitude toward risk in its investments, including the reliance on the plan sponsor to fund the deficit.
The panel also called on adopting a greater consistency of approaches between the 2014 and 2017 valuations and taking account of recent market improvements, new investment considerations and the latest data on mortality rates.
"The panel does not underestimate the practicalities of concluding an actuarial valuation so long after the process began. However, the panel believes it would be in the public interest if all stakeholders, including the regulator, could find a way forward to implementing our recommendations within the 2017 valuation," Joanne Segars, panel chairwoman, said in a news release.
"Ultimately, it will be for all the parties to decide whether to respond positively, but we believe that the report provides a genuine opportunity to turn the page, to focus on the long-term stability of the USS and rebuild trust and confidence in the fund. Our report and its recommendations do not address all the issues faced by the fund. We believe further work by the JEP should include developing an approach to the valuation that is clear and which can deliver a sustainable fund based on a shared set of principles," Ms. Segars said.