It is entirely within the gift of the USS Trustee to determine that the package suggested by UUK secures a strong covenant rating as employers believe it should. Bill Galvin, chief executive of USS, said that this currently seemed the most likely scenario but said that the proposed commitments were “weak”. "Employers and their staff need significant reassurance that the USS Trustee is not being overly prudent on matters like projected investment returns or undervaluing possible covenant support measures, both of which remain under discussion.". The increases reflect the need to make a substantial amount of deficit recovery, as the fund’s deficit now ranges from £14.9 billion to £17.9 billion. Registration is free and only takes a moment. Members of USS currently pay 8% of their salary into the scheme. Increased commitments that USS wants from employers, which include prioritising USS pensions over any new debt, would mean that the scheme would be willing to take significantly more investment risk over the longer term. The USS has suggested that contributions will need to rise from 30.7% of payroll to up to 56.2% in light of low interest rates and reduced expectations of future investment returns. If the deficit recovery contributions proposed by the USS Trustee under the 'as is' scenario were paid from current contribution rates, the amount left for future pensions would be at a similar level to a minimum auto-enrolment scheme. The University and College Union has repeatedly criticised the valuation approach to USS and raised concerns about the underappreciation of the strength of the employer covenant. “USS and employers must do better. In June USS will update their systems to produce quotes to reflect these changes. This may all sound a long way from the challenges faced by UK universities in 2021 but it isn’t. In its middle scenario, the USS has said that the overall pension contribution rate would need to rise to 49.6% of payroll. Millions of pensioners will receive a pay rise of 2.5% from April 2021, in line with the triple lock guarantee – equating to a boost of up to £228.80 for the year. The table below outlines the changes under Pensions Plus, and reflects the increase in USS standard member and employer contribution rates on 1 October 2019 and the planned increase in contributions from 1 October 2021: • An increase in contribution rates to 30.7% of the payroll (9.6% scheme members: 21.1% for employers) but with a “backstop” agreement that these would further rise to 34.7% (10.1% scheme members: 23.7% employers) from October 2021 in the event that the 2020 valuation did not conclude on time; Without this justification, employers and scheme members will be concerned that the scheme is facing an unnecessary level of reform. This proposal has now been shelved and a new contribution rate proposed from 1 October this year, with staff paying 9.6% of salary and employers contributing 21.1%. Employer and staff pension contributions to UK higher education’s biggest pension scheme are likely to rise to 49.6 per cent of salaries, according to the latest valuation. 2517018, Registered Office: Woburn House, 20 Tavistock Square, London WC1H 9HQ, Increased pension costs risk pricing university staff out of USS, Coronavirus (COVID-19) - information for universities. Jo Grady, general secretary of the UCU, said that “problems” with USS’ valuation methods and assumptions “have not been properly addressed despite widespread dissatisfaction among members and criticism from across the pensions industry and the higher education sector”. If this proposal is implemented, it would increase total contribution rates from 30.7% of payroll (i.e. Our academic colleagues in the UCU trade union are also striking for 14 days across February and March against the USS pension changes, pay cuts, BAME & gender pay gaps, casualis… The USS acknowledged that both Universities UK (UUK) and University and College Union (UCU) consider the current contributions to be at “the limits of acceptability”, and that the … Contributions are already set to grow in October 2021 to 34.7 per cent, to 11 per cent from employees and 23.7 per cent from employers. Corresponding employer contributions increased from 18% to 19.5%, then (from 1 October) to 21.1%, with a planned increase to 23.7% planned for 2021. It looks like your browser does not have JavaScript enabled. It has around 330,000 members across almost 400 institutions. USS’s covenant assessment, its proposed rule change and debt monitoring arrangements, and recovery plan needed to be resolved before employers could make informed judgements about the valuation, it relayed. The latest valuation report from the Universities Superannuation Scheme, published on 3 March, concludes that without further financial commitments from employers to strengthen the scheme’s covenant, overall contribution could even rise to 56.2 per cent. Employers have already gone a long way on offering covenant support; UUK's illustrated measures grant USS equal creditor status on significant secured borrowing and provide a moratorium on employers being able to exit the scheme without the USS Trustee's consent. Please turn on JavaScript and try again. If a deal could not be struck at that point, the combined contribution rate would increase to 34.7 per cent in October 2021. There are two rates for the Bereavement Support Payment. Employers and their staff need significant reassurance that the USS trustee is not being overly prudent on matters like projected investment returns or undervaluing possible covenant support measures, both of which remain under discussion.”. CPI Announced as 0.5% - Forces Pension Society This is the figure that will be used to increase all Armed Forces pensions in payment from April 2021. The joint negotiating committee, which includes representatives from UUK and UCU, will now be asked to decide on any changes to contribution rates or benefits that may be necessary. employer + employer contributions) currently to … UUK added that “employers understand that the USS has a sizeable deficit and that a high number of staff on lower grades opt out because the contributions are too expensive for them”. How much pension does a widow get? Get a month's unlimited access to THE content online. Universities found it “incredibly” difficult to make sense of the material presented by the pension scheme in the consultation, Universities UK (UUK) also said in its response. “It is important that USS is designed so that people in early career can also access an affordable pension. UCU will be holding a special sector conference for higher education branches to decide our next steps and cannot rule anything out.”, Dame Kate Barker, chair of the USS trustee board, said: “We fully recognise the scale of the challenge facing the scheme and sympathise with our employers and members in light of the difficult decisions that lie ahead. Contributions are already set to grow to 34.7 per cent in October 2021 (11 per cent from employees and 23.7 per cent from employers). It is important that USS is designed so that people in early career can also access an affordable pension. Defined benefit pensions, like the Retirement Income Builder, are rare because the cost of maintaining them increases in line with inflation and factors like life expectancy in retirement – and the average USS member can expect to outlive the UK average. The USS claims that the scheme’s deficit has increased and that we will all need to pay far more for our pensions in future. When the valuation will be finalised. UniversitiesUK (the organisation representing VCs) has been scathing in their response to the proposed valuation. If UUK increased its commitments, including at least a 12-year moratorium on employer exits, the USS trustee said the overall contribution rate would need to be 42.1 per cent. Commenting on the figures in the 2020 valuation report, a spokesperson for Universities UK, on behalf of 340 USS employers, said: "The very high prices for current benefits put forward by the USS Trustee are unaffordable for employers, risk pricing even more staff out of the scheme, and undervalue the collective and enduring financial strength of the participating employers. SOAS UNISON members are taking strike action on 20, 21 and 24 February over changes to their pension, the Universities Superannuation Scheme (USS). At the close of the 2018 valuation, the USS Trustee raised concerns in relation to covenant following Trinity College Cambridge's decision to buy-out of the scheme. Updated with: Public service pensions increase: 2021. It is already due to rise from 30.7% to 34.7% later this year. 25 February 2020. An open letter from university employers to staff impacted by the latest UCU pensions and pay disputes. Deferred Pension Increase Modeller Your details Calculation Date: 02/03/2021 Date of birth: Date of leaving: Section of USS: Final Salary Benefits Pension at leaving: (accrued prior to 1 October 2011) £ Pension at leaving: (accrued from 1 October 2011 to 1 October 2020) £ Pension at leaving: (accrued from 1 October 2020) £ To date the USS Trustee has not yet provided a clear and reasoned justification for its rejection of UUK's illustrated measures, or the much higher levels of covenant support it says are needed. Cambridge University VC and other leaders have written openly to raise serious concerns and call for re-engagement. Universities Superannuation Scheme (USS) is one of the largest principal private pension schemes for universities and other higher education institutions in the UK.. A valuation must be carried out at least every three years by law. Universities UK says increases are unaffordable for employers and risk pricing even more staff out of scheme. The USS pension scheme has today (3 March 2021) published its latest valuation report, which sets out the increase in contributions needed to maintain benefits at current levels, and address the scheme's growing deficit. Updated with 'Public service pensions increase: 2020'. USS: pension contributions will need to rise sharply if existing benefits are to be maintained 03 March 2021 The Trustee of USS, the UK’s largest private pension fund, has today published an update report that explains the funding challenges facing the scheme. "However, employers and scheme members need a stronger and clearer justification from the USS Trustee for the very high pricing decisions. Just register and complete your career summary. Members who pay into the USS scheme were balloted for strike actionearlier this year. In spring 2021, the JNC will meet to discuss how to address the contribution rate that has been set by the USS Trustee. The UCU points to the findings of a joint expert panel set up by the union and UUK at the end of last year’s strike that suggested that existing benefits could be protected if employees paid 9.1 per cent and employers 20.1 per cent. Mr Galvin said that the USS recognised the difficulty in increasing contributions but said the fall in interest rates since 2018 and the recent financial impact of the Covid-19 pandemic meant they were necessary. 25 February 2019 Without this justification, employers and scheme members will be concerned that the scheme is facing an unnecessary level of reform. “However, employers and scheme members need a stronger and clearer justification from the USS trustee for the very high pricing decisions. “We are somewhat dismayed the challenge is so substantive…but people will need to come together and work on this,” he said. You may be trying to access this site from a secured browser on the server. The USS Trustee has now set out higher prices than it previously thought necessary and it appears to be taking a more cautious approach than employers and our actuaries advise is needed. USS is one of the largest private pension schemes in the UK and is the principal scheme for academic and comparable staff in UK universities and other higher education and research institutions. The 2020 USS pension valuation is currently in process, and universally considered to be seriously defective. More university staff could be priced out of their pension scheme amid changes being put forward by the Universities Superannuation Scheme (USS), vice-chancellors and union leaders have warned. However, this would require more financial support guarantees from employees than are currently on the table, the fund says. Universities UK registered Charity No. The Universities Superannuation Scheme (USS), which is the major staff pension fund for many British universities and academic institutions, announced it wants to increase … It has the authority to decide on things such as reforms to pension benefits. Currently, contributions to the scheme are set at 9.6 per cent for members and 21.1 per cent for employers, a total of 30.7 per cent, although this was due to increase to 34.7 per cent on 1 October 2021. This means it is vital that contributions to the scheme are affordable and sustainable for staff and employers alike and that reform is necessary,” UUK said.
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