Published: 25 March 2019
The latest information on the Universities Superannuation Scheme (USS)
Members of staff will be aware that efforts are ongoing to ensure the future of the Universities Superannuation Scheme (USS).
The 2017 valuation of the USS pension scheme identified a significant deficit; the subsequent threat to increase contributions and do away with the defined benefit element of the scheme resulted in an industrial dispute which affected many campuses in March-April 2018.
In order to end the industrial dispute, the employers and trade unions established a Joint Expert Panel (JEP) – this was intended to find a way forward regarding the 2017 valuation which would be acceptable to both employers and members of staff. The JEP recommended that, if certain assumptions were made, the current benefits could be retained with only limited increases in employer and employee contributions. The JEP’s recommendations were largely accepted by both trade unions and employers.
For its part, the USS Trustee board agreed to consider the JEP’s findings in the context of a new 2018 valuation. The USS Trustee accepted some of the JEP’s findings and put forward two possible scenarios (‘book-ends’) in its 2018 valuation consultation: one in which contributions for both employers and members would need to increase markedly to maintain current pension benefits; and a second which would require only minimal changes to the proposed contribution rates compared to the JEP proposals. However, the USS Trustee board stated that it would only implement the second scenario position if it could levy additional contributions (‘contingent contributions’) in the event of a deterioration in the Scheme’s financial position before the next planned valuation.
The USS Trustee board then asked Universities UK (representing employers) to propose the terms under which contingent contributions might be activated. Universities UK has done so, with the help of their advisors, Aon.
Universities UK consulted employers on the proposed terms; these were largely endorsed by employers (including the University of Glasgow) and have now gone back to the USS Trustee board for its consideration.
In the meantime, the USS Trustee board has already announced an increase in both employer and employee contributions under the 2017 valuation, which will apply from April 2019. Employer contributions will increase from 18% to 19.5%, while employee contributions will rise from 8% to 8.8%. Further increases (to 22.5% and then 24.2% for employers, and 10.4% and 11.4% for employees) will apply from October 2019 and April 2020 if no agreement is reached on the JEP recommendations.
We will keep members of staff informed of further developments as they occur.
Further information is available on the following websites:
Dr David Duncan
University Secretary and Chief Operating Officer
First published: 25 March 2019