The University of Manchester Superannuation Scheme (UMSS)
02 May 2018
Providing retirement benefits for staff working in universities like ours is extremely important if we are to continue to retain and recruit highly valued, quality staff
You will be aware of the current issues around the Universities Superannuation Scheme (USS), which like many other defined benefit schemes, is facing falling returns on investments and rising future costs.
While USS is a sector-wide pension scheme involving around 350 employers, the University also runs its own pension scheme – The University of Manchester Superannuation Scheme (UMSS) - which currently has almost 3,500 members, mainly Professional Support Services staff working at grades 1-5.
We want colleagues to have the best possible outcomes at retirement; however, these outcomes need to be affordable for all.
What is the current situation?
The latest full valuation of UMSS took place as of 31 July 2016 and members have been updated about this in the latest edition of Pensions News. The valuation is an important three-yearly ‘health check’ that outlines if UMSS can meet the cost of providing benefits to its members in the future. It also enables the Trustees and University to look at how they can make sure the scheme is sustainable for the future.
The valuation assesses the UMSS funding position; this is measured by calculating the difference between its assets (money UMSS has in cash and investments) and its liabilities (money UMSS is going to need to pay out in respect of benefits earned to the valuation date - to those who have already retired and, in the future, to provide benefits to members on retirement).
The latest valuation shows that UMSS has a deficit of £207 million. Liabilities upon the University have risen sharply from those shown at the previous valuation in 2013, when the shortfall was £121 million.
Why are costs continuing to rise?
The costs of providing past and future pension benefits to members have continued to rise for two reasons. The first is that long term interest rates have fallen and remained at lower rates for longer than expected. Just as low interest rates impact any saving you may have, they also impact pension schemes like UMSS as it means more money is needed to pay pensions in the future.
The other factor is that we are living longer – which means that pensions need to be paid for longer, which increases the cost of providing them.
Changes were made to UMSS in 2012 to address these issues at that time and minimise the impact on members. However, costs continue to rise and the 2016 valuation shows that despite all the extra contributions which the University has made, the Scheme’s financial position has deteriorated. Importantly, future ongoing costs are hard to predict which makes it difficult for the University to plan. The University is now considering what options there are for UMSS.
What happens next?
It is important that UMSS remains affordable for both members and the University and gives flexibility for existing and new employees.
Any proposed changes to UMSS must be consulted upon by the University with the campus trade unions and both existing members and those eligible to join the scheme. Feedback from any consultation would be taken into account before any final decisions on the future benefit structure of UMSS are made.
In the meantime, the Scheme continues as normal and the University will communicate further with you through University staff communications if changes to the Scheme are formally proposed.
If you are a current contributing member you will have recently received your 2018 annual member statement which sets out details of your own benefit entitlements that have built up in UMSS to 31 March 2018.