Mercer’s Higher Education Group: Initial consultation on the USS 2026 valuation

At the end of January 2026, UCEA (the USS employer representative) launched the first employer consultation regarding the upcoming USS valuation as of 31 March 2026: Preparing for the 2026 USS Valuation – initial employer consultation

Key Deadline:

Responses are due by Friday, 27 March 2026 and should be submitted via UCEA’s survey portal here.

What is this consultation about?

USS’s September 2025 Financial Management Plan (FMP) showed an increase in the surplus (from £7.4bn at the 2023 valuation to £15.4bn at the September 2025 update) and a reduction in the contributions required (from 20.6% at the 2023 valuation to 15.9% at the September 2025 update):

*If cost sharing is adopted 65:35.

So, UCEA is seeking employer feedback on the forthcoming USS valuation at 31 March 2026, which could reveal a significant surplus. In light of this potential surplus, UCEA are particularly interested in your views on four key areas outlined in their document “Preparing for the 2026 USS Valuation – Initial Employer Consultation Questions” (third document at the bottom of the linked page here):

• Stability – of contributions and benefits
• Contribution levels
• Benefit levels
• Conditional Indexation (CI) – a potential new benefit structure where annual indexation of benefits (both pre- and post-retirement) would depend on the scheme’s funding level rather than being guaranteed.

UCEA encourages all USS employers to respond – even if you currently have no firm view.

Background information to assist you

To help you understand the context and potential implications, UCEA has provided two key documents:

1. “Charting a Course for the USS 2026 Valuation” from USS (first document at the bottom of the linked page here)
2. “USS employer considerations: 31 March 2026 Valuation and Conditional Indexation” from Aon, UCEA’s advisers (second document at the bottom of the linked page here)

Additional considerations: Investment strategy?

UCEA notes that “stability” can be achieved in various ways, including adjusting the investment strategy. This might involve reducing risk by shifting from growth assets to assets that better align with how benefits are valued, thereby lowering the risk of future deficits.

Previously, employers favoured a growth-oriented investment approach, partly due to concerns that de-risking could increase costs. However, the current environment is very different. A lower-risk investment strategy combined with options like conditional indexation could deliver stability at no additional cost – or potentially even lower costs. As the valuation process unfolds, it is crucial for employers to understand all options, including the potential impact of changes to the investment strategy.

Mercer support

If you would like assistance with your consultation response or simply want to discuss the issues, please feel free to contact Rebecca Dodd, Clarke Bedford, or your usual Mercer consultant.