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Proposed changes to USS pensions scheme
Key information
- What changes are being proposed?
The USS Trustee has proposed an increase in contributions it believes are needed to maintain benefits at current levels and address the scheme's growing deficit. A range of pricing scenarios have been proposed which will increase the amount you and your employer pay each month into the pension scheme. The current overall contribution rate is 30.7%.
- Scenario 1 – a total contribution rate of 56.2% based upon the current covenant support.
- Scenario 2 – a total contribution rate of 49.6% based upon the package of covenant support measures that UUK illustrated employers might be willing to collectively support based upon consultation feedback.
- Scenario 3 – a total contribution rate of 42.1% based upon a further strengthened package of covenant support measures identified by the trustee.
- Scenario 1 – a total contribution rate of 56.2% based upon the current covenant support.
- Why is the USS trustee proposing these changes?
The USS trustee completes a formal valuation every three years to ensure that it can afford to pay its members’ pensions and other benefits such as ill-health when due. The latest valuation in 2020 identified a deficit that needs to be addressed to ensure the long-term viability of the scheme. In the view of USS, the principal reason is the continued fall in interest rates and the depressed expectation for future investment returns, a problem all open defined benefit schemes face.
- How will this affect me as a USS member?
The current negotiations could result in a change to your future pension benefits, future contributions, or both.
- How is UCL responding?
The proposed changes to USS are being negotiated at a national level through the Joint Negotiating Committee (JNC) which is made up of 10 nominated members, five from UCU, five from Universities UK, and an independent chair.
We believe there are significant issues with the scenarios proposed by the USS Trustee, particularly around affordability, and UCL is committed to listening to our staff and sharing their feedback through the formal consultation processes this year.- What happens next?
Universities UK is currently consulting with all USS employers to address the scheme’s high opt-out rates, the deficit and covenant support measures, and affordable benefit structures and contribution levels.
UCL is seeking the views of USS members to inform UCL’s response to the consultation. Staff are encouraged to share their views anonymously via an online form.- What was the outcome of the 2020 valuation?
Recognising the volatility of the financial markets in March 2020, UCL consistently called for a 2021 valuation. UCL’s agreement to the changes to USS introduced from 1 April 2022 were conditional to a full review of the schemes governance and the introduction of an alternate low cost USS scheme arrangement to attract staff who are currently outpriced by the scheme.
Benefits comparison calculator
UCL Pensions Services have built a calculator to help you compare your current USS benefits with the current UUK proposal. For a full breakdown of how your benefits may change, simply download the spread sheet and select your current annual pensionable salary from the drop down list in cell C3.
