A consultation on a new valuation of the Universities Superannuation Scheme (USS) was published by the pension scheme’s Trustee on Friday 4 January.
In order to resolve the dispute over the future of the pension scheme, Universities UK (UUK), which represents USS employers (even if they are not members of UUK), and the University and College Union (UCU), which represents individual members (even if they are not in the union), commissioned the “Joint Expert Panel” (JEP) to look at the methodology used by USS to value the pension fund.
After the JEP published its first report in September 2018, the USS Trustee announced in November that it was commissioning the new valuation. This accepts some of the recommendations made by the JEP and also proposes to take into account developments since the last full valuation. These would have the effect of significantly reducing the long-term deficit in the scheme and, as a result, reducing the need for higher payments.
However, USS have not accepted all of the JEP’s recommendations and believe that the long-term viability of the scheme requires members to either accept higher payments immediately or take responsibility for the risks in the scheme.
In line with the scheme’s rules, the USS Trustee is now consulting on the proposed Technical Provisions for the 2018 valuation with UUK. The University’s Council will consider the Technical Provisions consultation and submit their views to UUK.
Once that consultation ends on 28 February, the USS Trustee will finalise the required contribution rate - and the Joint Negotiating Committee (JNC) will be asked how it wants to respond to any conclusions.
Until that process concludes, a number of changes to member contribution rates, starting April 2019, are still scheduled. As a reminder, these are: from 1 April 2019 member contributions are due to increase from 8% to 8.8%; from October 2019 they are due to rise to 10.4%; and from 1 April 2020 to 11.7%.
The April 2019 increases will go ahead, even if UCU, UUK and USS all agree on a proposed way forward. We very much hope that an agreement can be reached which means that the further increases in October this year and April 2020 will not be necessary.
As always, staff are advised to contact the Pensions team with any questions.