The Joint Expert Panel (JEP)
The JEP’s current work
The JEP has now started phase two of its work. This will be divided into two interlinking parts:
- The valuation process and governance.
- How the long-term sustainability of the Scheme might be secured through the development of a shared set of principles. The JEP will revisit the valuation of technical provisions and other aspects of the valuation methodology, including Test 1.
Part 1 is in progress. Part 2 will commence later in 2019.
The JEP’s first report – September 2018
The JEP published its first report on 13 September 2018. The report includes an assessment of the methodology, assumptions and process underpinning the 2017 valuation. The report also explores the scope for possible adjustments to the methodology which would allow the valuation to be concluded.
You can read the full report online. In summary, the JEP unanimously recommended four areas where adjustments to the valuation should be considered:
- A re-evaluation of the employers’ attitude to risk, which would result in a re-evaluation of the reliance on the sponsor covenant.
- Adopting a greater consistency of approach between the 2014 and 2017 valuations, which affects the scale and timing of deficit recovery contributions.
- Ensuring fairness and equality between generations of scheme members by smoothing future service contributions.
- Ensuring the valuation uses the most recently available information which means taking account of recent market improvements, new investment considerations and the latest data on mortality, for example.
In the statement releasing the report, the JEP said:
“Adjustments in each of these areas would have a material impact on the valuation and resulting contribution increases. The level of benefits is a matter for the stakeholders to negotiate. However, it is the Panel’s belief, based on independent actuarial analysis, that the full implementation of these adjustments could mean total required contributions estimated at 29.2% to fund current benefits (minus the 1% match). This compares to the current rate of 26% (18% of salary paid by employers, 8% by employees) and the rate of 36.6% from April 2020 which is proposed by USS, based on the valuation as it stands.”
UCU, UUK and USS have responded to the report:
We have created a modeller so that you can enter your own salary and see the potential impact of the JEP proposals (were they to be accepted by all parties). Download the modeller [Excel]