USS Benefit Reform Proposal – April 2019
The Universities Superannuation Scheme (USS) is currently undergoing it’s triennial valuation, which as at March 2017, seeks to establish whether the value of the assets the Scheme holds is enough to cover the level of pension promised to members on retirement (the liabilities).
Although the Valuation process is not complete, the results so far have shown an increase in the historic deficit from £5.3bn to £7.5bn in just 3 years. Also, the cost of future service pension benefits has risen by over a third since the last Valuation in 2014. As a result, it is deemed that the Scheme, in its current form, is unsustainable and requires reform.
Since January 2017, Universities UK (UUK) who is the representative of the 350 USS institutions and the University & Colleges Union (UCU), the member representative have met over 30 times to discuss various proposals. On 23rd January 2018 at the final Joint Negotiating Committee (JNC), a decision was reached to consult with members on the following proposal, with a view to implement the changes to the Scheme from 1st April 2019 at the earliest.
- Member contributions will remain at 8%;
- Members to have the option of paying a lower contribution rate of 4%;
- Employer contributions will remain at 18%;
- The Defined Benefit Threshold, currently £55,500, will be reduced to nil;
- This means that all contributions will be paid to the USS Investment Builder – the USS Defined Contribution section that was introduced from October 2016;
- Commitment to consider re-introduction of DB salary threshold in 3 years’ time;
- Of the 18% employer contribution, 13.25% will contribute towards the USS Investment Builder (regardless of whether the member pays 8% or 4%);
- Death and Incapacity benefits will remain on a defined benefit basis and largely unchanged;
- The 1% Matched AVC will cease.
What happens next?
In March 2018, employers will consult with members on the above proposal. This consultation will last for at least 60 days. The University will provide all Scheme members with consultation materials and instructions on how members can submit responses to the consultation.
Following the member consultation, any modifications required will be taken back to the Joint Negotiating Committee.
The formal Valuation is required to be completed by 30th June, although the USS Trustee has already indicated to the Pensions Regulator that this deadline may be missed due to the need for the consultation to be finalised and the Joint Negotiating Committee to conclude on the benefit reform decision.
Where can I find more information?