Michael Otsuka, a Professor of Philosophy at the London School of Economics, has written a detailed critique of the USS approach to valuing pensions. More text here…
…the approach being taken by the trustee is not an unusual one and indeed may be quite reasonable for a scheme which is closed to accrual, has a weak employer and is aiming to get to a position where it can buy out benefits. (A position which does reflect the position of a large section of UK pension funds – and one reason why comparisons between USS and the approaches used by other schemes are unhelpful). The point is that USS is not in this situation. Large open schemes with strong employers do not need to take this approach to valuations ….
