Proposed changes to the Universities Superannuation Scheme (USS) pension
9 January 2018
Information about the Universities UK proposal to change the USS pension scheme, which is offered at UCL and many other universities.
The USS pension fund is currently undergoing a regular valuation. This will assess the fund’s assets and liabilities, to ensure it has sufficient funds to pay eligible pensions now, and cover the future cost of benefits.
The 2017 valuation has identified that the USS deficit has risen to around £7.5 billion and the future cost of providing the current benefits has risen by over a third. In this context, it’s clear that the scheme cannot continue as it is.
At present, as an employee you make a contribution of 8% of your salary which is matched by UCL, your employer, with a contribution of 18%. Universities UK (UUK) undertook a consultation and as a result, it was confirmed that this is the maximum contribution employers are in a position to pay towards USS.
UUK have put forward a proposal to reform the future benefits structure, which would include the following:
- A move to offering ‘Defined Contribution’ (DC) scheme to all employees. In this type of scheme, funds are built up over time, through regular contributions which can be used to provide an income in retirement. The amount of income depends on the performance of the fund.
- Freeze the ‘Defined Benefits’ (DB) scheme, so that this type of scheme could be reintroduced if scheme funding improves. This type of scheme promises a specific income in retirement.
- Death and incapacity benefits would remain as Defined Benefits.
- Any benefits, accrued before any change is introduced, would remain unaffected.
AON has completed some initial modelling of UUK’s proposed benefit changes through an agreed seven example member scenarios. The AON document containing the scenario outcomes is available to read.
This proposal is under discussion by the Joint Negotiating Committee (JNC) who will meet again on 23 January 2018. If it is decided that a reform is necessary, there will be a formal consultation process. It is likely that this would take place from March 2018.
We are aware that this is a significant change to the scheme and your retirement income, so we are keen to provide you with additional information and support. We are hosting Pensions Town Halls on 24 January and 01 February 2018 and we hope you will be able to attend on one of these dates.
- Wednesday 24 January 2018: 12.30pm - 2pm in Archaeology G6 LT
- Thursday 01 February 2018: 3 - 4pm in LG04, 26 Bedford Way
Information on the USS Valuation is available on the USS website.