USS valuation methodology changes agreed - with more to do

UCU believes these changes are significant and far-reaching and will improve stability of contribution rates and benefits, increase transparency of prudence and allow for better long-term understanding and judgement of the security of members benefits.

Over the last 10 years, UCU conference has passed a number of motions on the flawed valuation methodology used by USS, with our current policy recommending 'That UCU continues to prioritise improvements in valuation methodology as the most effective means to introduce stability and safeguard member benefits while controlling costs for both members and employers.'

Following a two-year period of engagement with UCU actuary, First Actuarial, along with initial engagement with both USS and UCEA, UCU wrote to and then presented our proposal paper to the USS trustee board in Spring 2025. The key principles that underlay the proposed valuation methodology were:

1. to achieve stability and support the retention of the contribution rate already applying with an aim to set it at a sustainable prudent level at the outset and monitor the position to make sure it remains appropriate
2. to achieve clarity and transparency about margins for prudence
3. to incorporate measures which support rounded judgement, with no one measure given disproportionate weight.

To achieve these aims, the valuation methodology would incorporate three 'legs'.

Leg 1 - modelling of the funding position, and future evolution of the funding position, on a best estimate basis; and calculation of the future service rate on a best estimate basis.

Leg 2 - assessment of the accrued liabilities and contribution rate incorporating margins for prudence.

Leg 3 - modelling a realistic range of potential outcomes on Scheme closure or a contraction in the University sector to meet regulatory requirements.

Following the March presentation of UCU proposals, the USS trustee board responded positively requesting further technical discussions on UCU's proposals. These technical discussions were completed in September 2025 with a final paper being provided to the trustee board in November for its December 2025 meeting.

In December 2025, USS confirmed that there were a number of aspects of the UCU proposals that they were minded to adopt, subject to consultation later this year. These include:

• Three leg structure:
  Leg 1: best estimate assumptions
  Leg 2: technical provisions - a prudent funding measure
  Leg 3: contingency measures
• Emphasis on contribution stability
• Greater prominence on best estimates
• Incorporation of a broader range of metrics
• Consolidated documentation of risk management

The USS trustee board did confirm that there were a number of areas that required further consideration including the structure of the term dependent discount rate, the valuation investment strategy as the assumed asset allocation and the impact of changes on the Integrated Risk Management Framework. To this end, UCU is agreeing dates in the coming months to meet USS and UCEA to have further technical discussions around the new valuation methodology, metrics and documentation and to answer any outstanding questions for the Board.

These changes to USS valuation methodology are significant and represent the outcomes of substantial work by successive members of our Superannuation Working Group (SWG) as well as the excellent support provided UCU officials and our actuary, First Actuarial. The collaborative nature of the discussion has been positive and sets a real example of how good industrial relations can deliver for members.

UCU believes these changes, and hopefully more to come, will add further protection to members' pensions. It was the strength of industrial action taken by UCU members and commitment to detailed and technical negotiations that has delivered this positive outcome for current and future USS members. This work serves to remind all that unity and solidarity will always deliver for all our members and the wider union movement.