A smaller deficit thanks to market returns could mean some benefit improvements for the Universities Superannuation Scheme, London, its CEO said in a letter to participating employers Monday.
CEO Bill Galvin said in the letter that the funding deficit for the £88.8 billion ($116.6 billion) pension fund dropped to £1.6 billion at the end of March, from £14 billion in March 2020. "If the positive experience we've monitored over recent months becomes more established, there is potential for better news at the next valuation than at those of the recent past, and we would welcome that. Were such a scenario to play out, it may be possible for the JNC (Joint Negotiating Committee) to consider increasing benefits or decreasing contributions, or some combination," Mr. Galvin said.
That earlier deficit prompted some benefit reductions that have led to threats of strike action by university employee participants. University and College Union, the union representing those workers, has criticized the 2020 valuation and resulting benefit cuts because it came at the height of the pandemic.
"That valuation wildly underestimated the enduring strength of the scheme, as shown in this latest report," said Jo Grady, general secretary of the University and College Union, in an emailed statement. "Ahead of a new valuation which can increase staff benefits in the longer term, there must now also be urgent steps taken to harness this much improved position, preventing any more damage being done to our members' hard-earned pensions."
USS estimated that without the benefit cuts, the current deficit would be £3.1 billion and future service contributions would higher. In addition to the funding deficit, future service costs changes were made at the last valuation.
Mr. Galvin said in the letter that due to the uncertainty of higher inflation and other factors, USS will hold an accelerated year-end review to provide a more thorough analysis.
