Potential joint proposal on USS reform

kidmugsy

And another thing: I've had a glance at the link you provided from UUK, which is (correct me if I'm wrong) the Vice-Chancellors' club. My own guess about their incentives is that the VCs would at least like to get their own pensions into payment before USS turns up its toes as a DB scheme, and to postpone high extra costs for their universities until their own retirements. Lo and behold: that's entirely consistent with their proposition that "de-risking" occur, but on a delayed timetable: a bit like St Augustine's “Give me chastity… but not yet”.

Moreover, I did have a chortle at "Aon Hewitt’s view is that while interest rates will stay lower for longer, over a 5 year period (and longer) it is likely that interest rates will rise by quicker than is priced into the gilt markets." It's not just the horrible use of English - don't these lazy VC beggars proof-read what their assistants write for them? - it's the breezy assumption that they can know how quickly interest rates will rise. Look at chart 1 here.
http://blog.redington.co.uk/Articles/Dermot-Dorgan/May-2014/WAITING-FOR-RATES-TO-RISE.aspx

kidmugsy

Southend1 wrote: »

If 60/40 is typical then for a younger scheme like USS would you not weight slightly more toward equities? In the same way that an individual plan would lifestyle the investments within a pension?

What would be the effect on discount rate if you plug in 65/35, 70/30, 75/25 into your model?

Try it yourself: e.g. 0.65 x 3% + 0.35 x 0% = roughly 2%. Etc.

As for 60:40: it's my "base case", which might, in a hand-waving way, cover USS now, and in the future as the scheme matures. If they want to do market-timing, I'd say that 60:40 was rather gung-ho at the moment, if a large part of the "60" were to be in US equities, which look pricey. On the other hand gilt yields are dismal. Maybe they should buy some gold bullion? Your guess may be as good as mine, and better than USS's, UCU's and UUK's (since a responsible individual is likely to do a better job than some ramshackle committee).

In case of doubt: I am no fan of USS, having read their deplorable attempt to defend their habits, and their financial position, at the time of the criticism launched by the FT in (about) 2005. I'm no fan of UCU, not least because I once served on a branch committee of its predecessor, AUT, and found that the other members had just as low an opinion of the union's officers as I had. And I am no fan of UUK either: dear God, the standard of these people compared to the distinguished old boy I had as VC a million years ago when I was a fresher. Pah!

Southend1

Well I'm no expert but if I were in charge of USS I would be looking to take a longer term view and be a little higher in equities than 60/40.

For my own DC pot, before the provider switched to a lifestyle model as the default position, I chose to be 100% in equities because I had c.40 years to go until retirement. Obviously this wouldn't be appropriate for USS but surely the same principle applies?

Ps I agree with your assessment of UUK and today's calibre of VCs! Unfortunately there's not a lot we can do about that. However where union officers aren't up to scratch we can all do as you did and stand for election to the branch committee ourselves with a view to doing things better than the incumbents.

Southend1

In case anyone is interested, the online benefit estimator is now up and running at benefitestimator2015.com/

Doesn't seem to show a comparison with current scheme though.

UCU also have a calculator which seems to use slightly different assumptions. It does compare pension under the old scheme with pension under the proposed changes: http://defenduss.web.ucu.org.uk/whats-my-pension/

dunroving

Southend1 wrote: »

In case anyone is interested, the online benefit estimator is now up and running at benefitestimator2015.com/

Doesn't seem to show a comparison with current scheme though.

UCU also have a calculator which seems to use slightly different assumptions. It does compare pension under the old scheme with pension under the proposed changes: http://defenduss.web.ucu.org.uk/whats-my-pension/

The current scheme comparison is in the left column of the output table (Column A).

I posted here or in the other USS thread that compared to what the USS modeller gives me, the "normal" comparison (left side of the UCE table) was giving me different figures. I'd be interested t know if other people find the same.

ETA: Interestingly, our employer directed us to this calculator:

http://www.benefitestimator2015.co.uk/

That gives different answers to the UCU calculator AND the USS calculator (by about £700 per £10,000)!

Southend1

dunroving wrote: »

The current scheme comparison is in the left column of the output table (Column A).

I posted here or in the other USS thread that compared to what the USS modeller gives me, the "normal" comparison (left side of the UCE table) was giving me different figures. I'd be interested t know if other people find the same.

ETA: Interestingly, our employer directed us to this calculator:

http://www.benefitestimator2015.co.uk/

That gives different answers to the UCU calculator AND the USS calculator (by about £700 per £10,000)!

Yes, the current scheme comparison is in the left column of the output table (Column A) on the UCU modeller.

But I was pointing out that the http://www.benefitestimator2015.co.uk/ calculator doesn't give a comparison with the current scheme. Although bizarrely it seems to indicate that it is supposed to.

I noticed there is a difference between the figures produced by the UCU modeller and the benefit estimator too. I presume this is down to slightly different assumptions about pay increases.

dunroving

Southend1 wrote: »

Yes, the current scheme comparison is in the left column of the output table (Column A) on the UCU modeller.

But I was pointing out that the http://www.benefitestimator2015.co.uk/ calculator doesn't give a comparison with the current scheme. Although bizarrely it seems to indicate that it is supposed to.

I noticed there is a difference between the figures produced by the UCU modeller and the benefit estimator too. I presume this is down to slightly different assumptions about pay increases.

There is a button on the estimator that you have to click on. It then pulls up the current scheme to the right of the other two. The button says "Compare"

Sorry, I mis-read your other post.

Southend1

dunroving wrote: »

There is a button on the estimator that you have to click on. It then pulls up the current scheme to the right of the other two. The button says "Compare"

Sorry, I mis-read your other post.

Ah ok I think it may not be compatible with my internet browser. It works in internet explorer though. Thanks for that

ETA: thinking about it, why have they hidden it away like that? It's almost as if they have something to hide!

guymo

Most likely everyone directly affected already knows this, but the official consultation on changes to the USS begins on Monday March 16th. Documentation is available here:
https://www.ussconsultation.co.uk/members

kidmugsy

I have a friend who will be retiring under USS in about 18 months time. Could it possibly be worth his while to ask for a quotation for his Cash Equivalent Transfer Value? Does anyone know whether they are making generous offers at the moment?