Universities Superannuation Scheme (USS)

Proposed changes to USS

Latest update

Updated 29 May 2018: Announcement of appointments to Joint Expert Panel

Universities UK (UUK) and the University and College Union (UCU) announced last week that Joanne Segars OBE had been appointed as the Chair of the Joint Expert Panel (JEP) which will examine the valuation of the Universities Superannuation Scheme (USS). UCU also announced that it has nominated Professor Saul Jacka, Professor Deborah Mabbett and Associate Professor Catherine Donnelly to sit on the joint panel. Ronnie Bowie, Sally Bridgeland, and Chris Curry will join the panel as Universities UK’s nominations. The Joint Expert Panel has been set up by UUK and UCU to examine the valuation of the Universities Superannuation Scheme (USS). The Joint Expert Panel, which was established as part of an agreement reached between UCU and UUK at ACAS in March 2018, will start its work shortly so that it can report back in September 2018.

Brief biographies of members of Joint Expert Panel

Chair
Joanne Segars OBE is a widely respected figure in the pensions community. She is currently the Chair of LGPS Central Ltd, which pools the investments of nine large Midlands-based local authority pension funds. Prior to this, she worked for many years in senior positions in the pensions sector, including as Chief Executive of the Pensions and Lifetime Savings Association (PLSA) (previously the National Association for Pension Funds (NAPF)) for over 10 years and as Head of Pensions at the Trades Union Congress (TUC). Joanne is a current board member of NOW: Pensions, and the Environment Agency.

UCU Nominations
Saul Jacka is a professor of statistics at the University of Warwick and a Turing fellow at the Alan Turing Institute. He has worked in mathematical finance for over 30 years, and much of his research has focussed on how this field links with actuarial science. He is also a trustee of a defined benefit pension scheme for non-USS staff at the University of Warwick, and an independent actuarial examiner for the Institute and Faculty of Actuaries (IFA).

Deborah Mabbett has a strong academic background in pension policy. A professor of public policy at Birkbeck, much of her research has focussed on the relationship between the state and occupational or private pension schemes. Her current research focuses on the implications of rising and flexible retirement ages for the management of pension assets. She holds a PhD in Economics from the University of Oxford and has previously worked as an advisor to the World Bank in Lithuania and Moldova. She is also currently co-editor of the Political Quarterly.

Catherine Donnelly has worked as an advisor on pension scheme valuations and investment strategies for several pension consultancy firms. She is currently an associate professor at Heriot-Watt University, where she heads up the Risk Insight Lab focussing on pensions, investment and insurance research. Her own research examines different approaches to pensions and retirement income including defined benefit and collective defined contribution models.

(Biographic Information from UCU)

UUK Nominations
Ronnie Bowie is an experienced actuary, currently Partner (previously Senior Partner) at Hymans Robertson having joined the firm in 1980. Since August 2016 Ronnie has undertaken the role of Chair of Court at the University of Dundee. Ronnie was President of the Faculty of Actuaries and was a driving force behind its merger with the Institute of Actuaries becoming the first President of the combined Institute and Faculty of Actuaries. He is Chair of the Royal Bank of Scotland Pension Scheme, Chair of the With Profits Committee of the Prudential Assurance Corporation, Chair of Byhiras Trust and a fellow of the Royal Society of Edinburgh.

Sally Bridgeland currently combines governance consultancy for Avida International with a number of non-executive and advisory roles including a non-executive directorship at insurer Royal London, at Impax Asset Management plc and Local Pensions Partnership (LPP) Limited, where she chairs its FCA regulated investment company. She is a trustee at both NEST Corporation and the Lloyds Bank pension schemes and at the Nuclear Liabilities Fund. Sally was previously the Chief Executive Officer of BP Pension Trustees Limited. Before BP, Sally spent twenty years with Aon Hewitt (originally Bacon & Woodrow) working both as a pensions consultant and in the investment practice. Sally was the first lady Master of the Worshipful Company of Actuaries in 2016–17.

Chris Curry is the Director of the Pensions Policy Institute (PPI) with overall responsibility for leading and managing the PPI. At the PPI Chris has authored and presented a number of research reports analysing and other provision for retirement income. In 2017, Chris was one of the three co-chairs for the DWP Automatic Enrolment Review Advisory Group. The review looked at ensuring workplace pensions continue to meet the needs of individual savers, and employers, whilst remaining fair, affordable and sustainable for future generations. Chris started his career as an Economic Adviser at the Department of Social Security (now the Department for Work and Pensions), before joining the ABI as Senior Economist.

(Biographic Information from UUK)


Updated 5 May 2018: Message sent to members of USS

Dear Members,

We wanted to write to you as a member of USS to share an update from the USS Trustee, and to explain the reasons why the USS Trustee is communicating to members at this time, as well as to update you on the progress of the Joint Expert Panel.

As you may know, the USS Trustee is the Board who manage and administer the USS. They are responsible for undertaking a three-yearly valuation of the scheme so they can provide assurance to the Pensions Regulator that the scheme is sustainable and, if it is not, to agree a new funding plan and propose changes.

Earlier this month, Universities UK (UUK), representing universities, and the University and College Union (UCU), representing members of USS, agreed to establish a Joint Expert Panel (JEP) to consider the methodology and assumptions used in the 2017 USS valuation. The full membership of the JEP, including the name of the independent chair is expected to be announced shortly. The panel will be meeting over the coming months to carry out a review of the valuation, and we anticipate a report on their conclusions, and any alternative funding proposals, will be released in September 2018.

UCU and UUK have both publicly indicated they no longer support the January 2018 proposal to change the scheme’s benefit structure to a wholly defined contribution arrangement. However, this proposal was only formally revoked at a meeting of the Joint Negotiating Committee on 27 April 2018. We are currently awaiting the work of the Joint Expert Panel (JEP) before a new proposal can be put forward.

In the meantime, as the USS Trustee has a statutory responsibility to ensure the pension scheme is sustainable into the future, they have written to USS members to let them know that if the Joint Expert Panel is not successful in reaching an agreed alternative funding proposal by early Autumn 2018 they will need to trigger the commencement of a process for sharing of the costs of the current benefit structure under rule 76.4 of the scheme rules. This would mean the current pension benefits would continue from April 2019 and would be funded by a shared increase in costs between the employers and members.

The USS Trustee is required to do this in order to offer assurance to the Pensions Regulator that, if a new proposal is not agreed and implemented by April 2019, they have a plan in place to ensure the scheme will be sustainable into the future.

We thought it would be helpful to set the context for the USS Trustee communication, and to let you know that, if an alternative funding arrangement for the scheme is identified and accepted by all parties then the USS Trustee would not invoke their plan to increase contributions.

We would also like to re-iterate our full support and confidence in the work of the Joint Expert Panel, as well as their plan to release their report by September 2018.

Best wishes,

Jacqui Marshall, Deputy Registrar & Director of People Services & Global Partnerships

Follow the links below to read:
Message from USS Trustee
Response from UCU
UUK pensions webpage

 


Updated 23 April 2018

Plans by the University and College Union (UCU) for further industrial action in the form of strikes, or action short of a strike have been suspended. This is because UCU members have voted to support the creation of a Joint Expert Panel for USS. The panel of actuarial and academic experts will review the basis of, and agree key principles for, the valuation of USS, with panel members nominated in equal numbers by Universities UK and UCU. This was proposed by ACAS and consulted by UCU and Universities UK (UUK).

  1. A formally agreed Joint Expert Panel, comprised of actuarial and academic experts nominated in equal numbers from both sides will be commissioned, to deliver a report. Its task will be to agree key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund.
  2. It will require maintenance of the status quo in respect of both contributions into USS and current pension benefits, until at least April 2019.
  3. There will be a jointly agreed chair whose first step will be to oversee the agreement of the terms of reference, the order of work and timescales with the parties. Any recommendations by the group must be based on a majority view of the panel without the use of a casting vote. A secretariat, jointly agreed by the parties, will be appointed.
  4. The panel will focus in particular on reviewing the basis of the scheme valuation, assumptions and associated tests. It will take into account the unique nature of the HE sector, inter-generational fairness and equality considerations, the need to strike a fair balance between ensuring stability and risk. Recognising that staff highly value Defined Benefit provision, the work of the group will reflect the clear wish of staff to have a guaranteed pension comparable with current provision whilst meeting the affordability challenges for all parties, within the current regulatory framework.
  5. The panel will make an assessment of the valuation. If in the light of that contributions or benefits need to be adjusted in either direction, both parties are committed to agree to recommend to the JNC and the trustee, measures aimed at stabilising the fund to provide a guaranteed pension broadly comparable with current arrangements.
  6. Alongside the work of the panel both sides agree to continue discussion on the following areas: comparability between TPS and USS; alternative scheme design options; the role of government in relation to USS; and the reform of negotiating processes to allow for more constructive dialogue as early as possible in the valuation process.
  7. Support for this process will need to be sought from the USS trustees and the pensions regulator, recognising their statutory responsibilities. Both UCU and UUK will make the necessary approaches to seek this support.
  8. Should this process prove acceptable to all parties this could provide the basis for the UCU to consult its branches and members on ending the industrial action currently underway within the sector.

UUK has suspended the scheduled employer consultation with scheme members pending the findings of the Panel.

In addition, UUK and UCU will make a joint approach to the USS Trustee and the Pensions Regulator on the timing of the completion of the valuation, recognising their statutory responsibilities.

Key points

Summary of changes to USS

1. USS is a national pension scheme for academic and senior professional services staff in pre-1992 Universities. The scheme is managed by an independent trustee board in accordance with the requirements of pensions legislation and the Pensions Regulator and in consultation with Universities UK (representing employers) and the University and College Union (representing scheme members).

2. Despite changes to the scheme in 2011 and 2016 to address significant funding challenges, the deficit is expected to increase from £5.3 billion (at the March 2014 valuation) to £7.5 billion at March 2017. 

3. Universities believe changes are necessary to address USS’ significant funding challenges and put the scheme on a sustainable footing for the long-term, while continuing to offer attractive pensions to staff, now and in the future, and ensuring that contributions remain affordable to both staff and employers.

4. Over the last year, there have been more than 45 meetings at national level between UUK and UCU to discuss these funding challenges. 

5. A Joint Expert Panel, with panel members nominated in equal numbers by Universities UK and UCU, will be formed to review the basis of, and agree key principles for, the valuation of USS. To allow their work to happen, there will be no change to the current contributions or pension benefits of USS until at least April 2019.

6. Any changes will only affect benefits earned after the implementation date, as benefits already accrued are protected by law and cannot be changed retrospectively.

Frequently Asked Questions

Read the full list of 2017 valuation Frequently Asked Questions.

If your question relates to industrial action please go to Industrial action

USS scheme: current overview

The information below summarises the current benefit arrangements for members of the Universities Superannuation Scheme – commonly known as USS. These are expected to change from April 2019. 

Staff on Grades E and above are eligible to join the Universities Superannuation Scheme – commonly known as USS.

The Contract of Employment you will be offered before you join the University of Exeter will contain brief details regarding your pension scheme. Importantly, your contract will inform that you will automatically be put into the pension scheme unless you opt not to join. If you do not wish to be a member of the pension scheme, you must contact the Payroll and HR Administration Office in People Services immediately for a USS “Opt Out” form to prevent any deductions being made from your salary. The form will need to be completed and returned to the Pay and Benefits Office before the cut off day for payroll.

New to USS

If you are about to join, or have just joined, there are a some things you should think about straight away:

  • Complete the death benefit nomination forms
  • Expression of Wish – Everyone should complete this to let USS know where any lump sum should be paid in the event of your death.
  • Registration of Potential dependant – Only complete this form if you are not married nor part of a civil partnership. This form is used to notify USS of a financial dependant who might qualify to receive the equivalent of the spouse’s pension on your death.
  • Been in USS before – if you have previous membership of USS please let us know, especially if you have just joined us from another institution. This way we can make sure that your USS records are maintained and ensure that the correct rate of employee contribution are taken from your pay. It is especially important if you were paying Additional Voluntary Contributions at your previous post as these will need to be carried on being deducted from your pay at this institution.

Information on the benefits provided by USS including information for members, prospective members as well as deferred and retired members and any forms that are required can be found on the USS website

Pension input period for USS

USS have issued an announcement to scheme members regarding the pension input period for the purpose of calculating the Annual Allowance for tax purposes - see the USS website

Opting out of the scheme whilst remaining in employment

Whilst the scheme gives automatic membership, you do not have to take this up and can choose to opt out of the scheme at any time. The options upon leaving the scheme this way are the same as those if you left the employment of the University.

You can of course choose to opt back in, subject to conditions.

Further information

Previous staff communications

Email from Jacqui Marshall, Deputy Registrar and Director of People Services & Global Partnerships sent on Tuesday 13 March 2018

Dear Colleagues,                                                                                                              

We wanted to let you know that earlier today, the Universities College Union (UCU) Higher Education Committee rejected the revised proposal to the USS pension scheme – this new proposal was agreed by UCU and Universities UK (representing employers) at ACAS yesterday.

This means that strike action, and ongoing action short of strike, is due to continue for the remainder of this week (Wednesday 14 – Friday 16 March). In addition to this, we understand that UCU intend to make plans for a further 14 days of industrial action during the assessment and exam period.

We are of course very disappointed with this outcome and will continue to encourage further national discussions between UCU and UUK in order to find a swift resolution to this dispute.  

We will continue to share further updates with you. 

Yours faithfully,

Jacqui Marshall

Deputy Registrar and Director of People Services & Global Partnerships

 


Q&A session on proposed changes to the USS pension

Andrew Connolly, Chief Financial Officer, University of Exeter, along with Dr Barrie Cooper, Joint President of the University of Exeter Branch of UCU, answered questions on Tuesday 9 January.  Colleagues can watch a recording(sign-on required). Colleagues can also sign in to view the USS slides from Barrie on behalf of the UCU and USS presentation from Andrew representing the University as employer. A written summary of questions and answers can be seen here: USS Q&A 09.01.2018.  


 

USS website

Full information for USS members regarding the 2017 valuation can be found on the USS website.