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Proposed changes to USS pensions scheme

USS is the principal academic pension scheme for the higher education sector. The scheme are reporting a significant shortfall in meeting its future funding commitments within its 2020 valuation and are working with employer and member representatives to achieve a sustainable solution which addresses affordability and intergenerational fairness.

Latest

  • USS Employer Consultation and ModellerUCL launched a consultation on the proposed changes to USS in response to the 2020 valuation on 1 November 2021. USS members and prospective members are encouraged to respond. The closing date for the consultation is 17 January 2022.
     
  • USS Pensions explainer (November) Q&A factsheet. Alongside the recorded explainer session, Mercer, the universities pension specialists, have produced a Q&A document that provides a simple and accessible overview of the current position of the valuation.
     
  • USS Pensions explainer (September) recording and Q&A. This session was held on 22nd September 2021 with universities pensions specialist Rebecca Dodd providing an overview of the latest news and discussions related to the USS valuation.
  • USS Pensions explainer (June) recording and Q&A. This session held on 22 June 2021 and hosted by universities pensions specialist Rebecca Dodd gives an overview of the details of the USS scheme and provides context to the current issues being experienced.

 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.
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.

 

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.

 

Further information

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FAQs

A list of frequently asked questions.

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Glossary

A glossary of terms related to the USS pensions valuation.

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Timeline

A timeline of events related to the USS pensions valuation.

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Archive

An archive of news items on current and previous valuation exercises.