Some reservations regarding the proposed joint panel of experts
[The post below is now superseded by this linked post called ‘Why I now strongly support the latest USS pension offer’.]
Both sides will have a huge incentive to appoint only those who can be relied upon to advocate a position in line with that of their own actuary, where that position is itself shaped (within professional limits) to advance the interests of the client. In this respect, one’s actuary isn’t so different from one’s solicitor.
Unless one side makes a mistake and appoints someone who goes rogue, won’t we have two different, irreconcilable reports — one along the lines of First Actuarial’s, the other along the lines of Aon’s? Agreed that, in this case, things shouldn’t be left to the the casting vote of a single chair appointed by both sides. That would essentially be to create a panel in which a single person’s views are decisive. But in the absence of a chair’s casting vote, how will such a panel manage to come to an agreement? How will such a split panel advance things beyond where they are at present?
Note also that JNC, with its current structure involving chair’s casting vote, is still the relevant decision-making body, as spelled out by the scheme rules, when it comes to benefit design. This expert panel can only recommend to it. It can’t decide anything.
And the USS trustee, plus their actuary, has ultimate control (within the limits set by tPR) over the valuation.
Should we really be investing efforts into delaying things in order to set up such a panel?
My own preference is for insistence on greater transparency rather than a panel which, if chosen wisely by each side, will simply present two mirror images of the positions of the actuaries of UCU and UUK.
In the tweets to which I link here, I was criticising the non-starter of a UUK proposal of a self-appointed panel of ‘independent’ experts. A panel with equal representation of nominees from both sides is an improvement over that. But, as I explain in the tweets to which I link (which draw inspiration from blog posts by Dennis Leech and Henry Tapper), I would have preferred the alternative involving greater transparency.
But I would not have made this particular issue the focus of recent negotiations, unless perhaps it had already been agreed with USS and tPR that they will accept the placement of this valuation on hold while this panel does its work — though, again, I don’t really see how the work of such a panel will advance things much beyond the existing papers of the actuaries that advise both sides.
If there hasn’t been such an agreement with USS and tPR — and I’m somewhat doubtful that tPR would have agreed to this rather than providing gnomic, noncommittal statements — I think it would be better to carry on as before, in trying to push back the limits of the existing valuation in order to provide space for a proposal involving benefits that both sides can agree upon.
If we don’t continue with those efforts, we may be in for a nasty surprise in ending up with either a defaulting back to the 23 January UUK proposal of 100% IDC, which goes out to consultation, or else the following: a JNC imposition of the ACAS-mediated agreement, by UUK and chair’s casting vote.