Following communications from Universities UK (UUK) and the Employers Pension Forum (EPF), the University understands the latest position with respect to the Universities Superannuation Scheme valuation and the USS Joint Negotiating Committee to be as follows.

The Universities Superannuation Scheme (USS) is required under pensions legislation to undertake its triennial valuation as at 31 March 2011 to determine whether the scheme's assets are sufficient to cover its liabilities in pensions owed. The USS Board has now finalised its proposals on the assumptions to be used for that actuarial valuation which would, should those assumptions be adopted, indicate a funding deficit in the scheme of £2.9bn.

The USS Board's assumptions indicate a £2.9bn deficit in funding which is mostly due to changes in assumptions, such as increased longevity, and lower than expected investment returns. This would leave the scheme 92% funded and would be a reversal of the position in 2008 when the scheme had a surplus of £0.7bn and was 103% funded. The scheme changes implemented on 1 October are vital in managing these risks to ensure that the USS continues to be sustainable and affordable in the long term.

UUK, (who hold the position of representative employer under the rules of USS) will be responding to the USS Board's proposals on behalf of the member institutions of the USS prior to the next meeting of the USS Board on 18 November 2011.

Any deficit would require the USS Board to agree a recovery plan with the Employer and the Pensions Regulator. As the assumptions for the valuation have not as yet been finally determined, the USS Board have not given an indication of what any recovery plan could look like, however, much depends on the assessment of the member institutions' ability to financially support the scheme (the covenant). The possibility exists that the University could be asked to inject additional funding into the USS to support a deficit recovery plan.

The USS Joint Negotiating Committee (JNC) met on 27 October and has agreed an initiative to establish a joint working group which seeks to improve dialogue between the employers and the UCU and increase understanding of the financial position of the scheme. The working group will be formally established at the next meeting of the JNC in mid December. The agreed terms of reference are below.

As part of this agreement, the EPF understands that UCU intends not to escalate any current action while the working group starts work.

The UCU has issued a media release 'UCU welcomes fresh pension talks' http://www.ucu.org.uk/index.cfm?articleid=5800

An Employers Pensions Forum spokesperson said:

"The willingness from both sides to set up a working group to get talking after the difficult times leading up to the implemented scheme changes on 1 October is a positive step. The working group is an opportunity to improve dialogue and develop everyone's better understanding of the USS scheme and to work together to ensure the scheme remains affordable and sustainable for all in the long-term."

The USS commented as follows:

"The employer and UCU representatives have agreed to establish a working-group at the JNC meeting in December 2011 to explore options, without prejudice, for future changes to the scheme within the context of the scheme's sustainability. The JNC agrees that any further scheme changes should produce outcomes considered fair for scheme members and employer stakeholders."

Terms of Reference for a joint working group of the joint negotiating committee (JNC)

1. The employer and UCU representatives agree to establish a working group at the JNC meeting in December 2011 to explore options, without prejudice, for future changes to the scheme within the context of the scheme's sustainability. The JNC agrees that any further scheme changes should produce outcomes considered fair for scheme members and employer stakeholders.

2. The working group will be chaired by the chair of the JNC and comprise two members of the employers and union sides respectively, one of each of whom should be a member of the JNC plus up to two senior officials representing the interests of the employers or union sides. Each side may also have up to two advisers present. By mutual agreement, the working group may invite other interested parties to participate or facilitate key discussions.

3. A preparatory meeting will be held in November to deal with initial matters and establish a programme for future work.

4. The outcomes of the preparatory meeting will report to the JNC to be scheduled for mid- December.

5. In order to facilitate agreement, both sides agree that the paper JNC 34-11, titled "Changes to the Pension Tax Rules", will be discussed by employer and UCU representatives in November and the outcome reported to the December JNC.