Our University’s response to USS Trustee’s proposals
03 Jun 2019
Update on Universities Superannuation Scheme (USS) consultation with employers for the 2018 actuarial valuation
We recognise the great value and importance of pensions to all of our staff and the shared concerns about pressures on the USS pension scheme which are driven by issues affecting many UK schemes. We are very aware of the difficult choices in respect of pension provision – especially in ensuring fairness in future contributions from both employees and employers. We seek to provide a quality pension scheme that is sustainable and affordable in the long term.
As colleagues will know, there have been ongoing discussions at national level to find a way forward to secure this objective. Earlier this year Universities UK (UUK), which represents all employers in USS, invited employers, including our University, to give their views on the USS Trustee’s proposals for top-up (also known as ‘contingency’) contributions as part of its consultation on the 2018 actuarial valuation.
On 9 May 2019 the USS Trustee proposed three options for the completion of the 2018 valuation, following consideration of UUK’s earlier response to the 2018 valuation consultation. All three options protect current benefits for all USS members but would see both employers and members required to pay additional contributions to ensure that future benefits are maintained.
The University’s Finance Sub-Committee and Board Finance Committee has fully considered the USS Trustee’s three options and has recommended that our University should support option three. If implemented, would mean that from October 2019 contributions of 30.7% would be made with employers paying 21.1% of pensionable salary and scheme members paying 9.6%, with the next actuarial valuation being brought forward one year to March 2020.
If the Trustee proceeds with option three, which will need to be approved by the Pensions Regulator, these new contribution rates (as above) would replace the current planned increases in October 2019 (i.e. 22.5% for employers and 10.4% for members).
The new rates would remain in place until the next valuation is completed; should no agreement on the contribution rate from the 2020 valuation be reached before October 2021, the contribution rate would then rise to 34.7%, with employers paying 23.7% and members 11%.
The Joint Expert Panel (JEP) is currently working on options for the next valuation, considering whether there are alternative medium-term options to reform USS to ensure the scheme remains attractive and affordable for the long-term.
This is a truly regrettable position that we find ourselves in but sadly it is not unique to USS. Pension schemes across many other sectors are struggling to deliver benefits to their members that are financially viable and sustainable for both employers and employees.
I realise that this issue continues to be of concern to our staff, however it is important to stress that our University is taking every opportunity to provide feedback into this consultation and remains committed to providing pension benefits for colleagues both now and in the future.
The University’s response to UUK is available at:
Kind regards
Steve Dauncey
Director of Finance