USS Pension Update
Issued: Thu, 09 Aug 2018 14:59:00 BST
As members of staff will know, Universities UK and the University & College Union (UCU) have established a Joint Expert Panel to assess the 2017 valuation of the USS pension scheme. The Joint Expert Panel was set up in May 2018; it has an independent Chair (Joanne Segars OBE) and includes equal representation from employers and the UCU. It is expected to report in September 2018. Further information on its work is available here.
In the meantime, the USS trustee has announced that it is “applying the default cost sharing process laid out in the scheme rules to complete the 2017 valuation”. In essence, this means that those responsible for USS have identified the contribution increases which they believe are necessary to fund the current level of benefits. The USS trustee is requiring employers to conduct a formal consultation with members about these increases; we will write to you about this in the autumn. If the Joint Expert Panel process does not lead to an alternative way forward which is acceptable to all parties (employers, union, USS trustee and the Regulator), the increases will be introduced progressively from April 2019.
This action may seem strange given that the Joint Expert Panel is still meeting, but the trustee has concluded that it has to do this to meet the statutory requirements overseen by the Government’s Pensions Regulator.
The increases which the USS trustee will require us to consult on are:
Current rate From 1 April 2019 From 1 October 2019 From 1 April 2020
Member rate 8% 8.8% 10.4% 11.7%
Employer rate 18% 19.5% 22.5% 24.9%
While all members of the scheme will have a formal opportunity to comment on these numbers, if the benefits structure remains unchanged, it seems unlikely that the USS trustee will change its position as a consequence of the consultation.
The University of Glasgow’s position on USS remains unchanged. We:
• Would like to retain a defined benefits element to the scheme
• Want a settlement which is (a) affordable for both universities and members and (b) enduring
• Are prepared to support a modest increase in employer’s contributions in order to make this possible
• Recognise that any settlement has to be acceptable to the USS trustee and the Pensions Regulator
• Want to avoid industrial action by finding a way forward through negotiation.
The University of Glasgow is in a relatively strong financial position. We could afford a modest increase in employer’s contributions and, as previously indicated, are prepared to support this. However, the percentage increases in the table above would cost the University £13m a year from 2020; we would have to make fundamental changes to our medium-term budget, affecting spend on staff, equipment, buildings and infrastructure. At the same time, a 3.7% increase in member contributions would have a considerable impact on the take-home pay of USS members. Equally worrying is the effect these changes could have on the HE sector more generally – there is a strong likelihood that the increases would lead to significant redundancies in financially weaker institutions.
As a University, we will continue to:
• Reiterate publicly the need to reach agreement on the way forward. We believe this will require compromise on all sides
• Maintain an open dialogue with local UCU representatives
• Manage the University’s finances prudently, so that we are in the strongest possible position to cope with whatever changes may arise.
Professor Neal Juster, Senior Vice Principal & Deputy Vice Chancellor
David Duncan, Chief Operating Officer & University Secretary