Universities Superannuation Scheme, London, has a significant surplus that will lead to lower contribution rates, according to its 2023 valuation released Nov. 3.
After dealing with deficits and rising contribution rates for more than a dozen years, the 2023 valuation reflects rising U.K. gilt yields over the last 18 months that led to a surplus. In contrast to the March 31, 2020, valuation that showed a £14.1 billion ($17. 5 billion) deficit, the latest valuation projects a £7.4 billion surplus.
The corporate retirement plan for universities and higher education institutions was comprised of £73.1 billion in defined benefit and £2.2 billion in defined contribution assets as of March 31.
The surplus will allow USS to lower the overall required contribution rate for employers and participants at current benefit levels to 16.2%, down from 25.2%, by January, while also keeping a buffer for future valuation cycles, USS officials said.
The next step is for a joint negotiating committee of employer and participant representatives to review the latest valuation and approve any changes to contribution rates or benefit levels. Talks with contributing employers around possible investment changes could begin in January, they said.