Video | Proposed changes to USS pension scheme
Check out these tools and videos to help you understand the proposed changes to the scheme.
The Universities Superannuation Scheme (USS) has been going through a valuation process – a statutory assessment of a pension scheme’s financial health, carried out at least once every three years. Stemming from this process, Universities UK (UUK) on behalf of employers, has proposed some changes to the scheme which have now been accepted by the USS Joint Negotiating Committee (JNC) and the USS Trustee (which manages the scheme). These changes will apply to all currently active members, subject to consultation.
They mean that scheme members will continue to benefit from a good pension, while avoiding significant increases in their contributions from the current 9.6% to at least 13.6% of their salary next year, and possibly as high as 18.6%. Instead, from this month, member contributions increase by just 0.2%, to 9.8%, and employer contributions will increase by 0.3%, to 21.4% (more than two and half times the average contribution rate for FTSE 100 companies).
According to figures published by the USS Trustee, the proposals would reduce the amount USS pension members receive in retirement by around 10 to 18% for most members (7 to 15% including state pension) – contrary to a figure of 35% reduction reported elsewhere. All benefits earned from contributions to date are safe and will not be affected.
Resources to help you understand proposed scheme changes
- Videos | Three short videos published by the Russell Group to explain the affordability of the scheme, the commitments made by universities to support it, and moves to reform its governance
- Contributions calculator developed by Universities UK, which shows how much more USS pension scheme members would pay each month if its reforms did not go ahead.
- Examples showing the impact of the proposed benefit changes on a range of salaries (published by USS)
- Glossary of key terms to help you bust through all the pensions jargon.
The JNC decision also means that the defined benefit (DB) element of pensions will build up at a slower rate from 1 April 2022. Defined contribution benefits will be offered in respect of salary over £40,000 (currently £59,883.65).
The proposals will be the subject of a 60-day consultation this autumn-winter on the scheme changes agreed by the JNC, with scheme members, eligible employees and employers.
A major review of the scheme’s governance is proposed, alongside exploring moves to a Conditional Indexation model, which pegs a part of annual pension provision to the performance of scheme funds. This would be done via a working group of members’ representatives, employers and USS.Posted in: USS PensionHigher education news