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  3. https://www.ft.com/content/976d9cf4-ce73-11e9-99a4-b5ded7a7fe3f
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  5. USS has always focused on best long-term outcomes
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  7. From Bill Galvin, Chief Executive, Universities Superannuation Scheme
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  13. YESTERDAY Print this page4
  14. The Lex note “UK university pensions: bottom of the class” (August 31) misconstrues the issues facing the Universities Superannuation Scheme. It conflates incorrect assumptions about historic asset allocation with the problems facing defined benefit (DB) schemes, particularly the minority still open to new benefit accrual: inflated asset prices and the prospect of lower future returns.
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  16. The challenge today is the required level of contributions to support new DB accrual when the market price for guaranteed inflation-linked income streams is at historic highs. The growth in the absolute size of assets and liabilities relative to sponsoring employers (the universities) limits the level of investment risk we can prudently take. Meanwhile, historically low gilt yields are associated with lower expected returns across asset classes. These factors underline the importance of adequate contributions for accruing pension promises.
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  18. In the face of these challenges, governance of the USS’s investment strategy has been thoughtful and always focused on the best long-term outcomes for beneficiaries. Both our asset allocation decisions and the performance of our investment team have delivered strong returns over the past decade for our 440,000 members.
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  20. Our annual report is clear: over three, five and 10 years, returns from the USS’s asset allocation decisions have outperformed the gilts liability proxy, and so have clearly surpassed many of the possible alternative strategies. This has been accompanied by a significant diversification and reduction in the equity risk in the portfolio. Performance in asset management has also been creditable. Over the five years to the end of 2018, the USS placed in the top quartile for investment returns in a review of large UK pension funds by Mercer.
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  22. Past performance is not the issue — that is clear from the evidence. The key concern for the USS, and for all pension providers, is the future prospects priced into today’s markets.
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  24. Bill Galvin
  25. Chief Executive,
  26. Universities Superannuation Scheme
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