This is part of a regular series of communications over the next few months to update staff on the progress of the 2020 valuation of the USS pension scheme.
This update concerns the decision by Employers in the Universities Superannuation Scheme (USS) to back proposals for the medium and long-term reform of the pension scheme.
It follows a UUK consultation which received responses from employers representing 95% of USS membership.
USS Employers warn that without changes to the scheme, employers and scheme members face escalating contribution rates which risks pricing more and more members out of pensions saving.
The 2020 valuation of USS highlighted significant financial challenges which The Pensions Regulator and the USS Trustee require to be addressed.
UUK received 141 responses from employers to its recent consultation, outlining their support for the following package of reforms:
• Employers to offer further, stronger covenant support measures including a moratorium on exit, debt-monitoring and protecting the USS Trustee’s status as a creditor.
• No increases in member contributions or employer contributions.
• Maintaining the scheme’s Defined Benefit /Defined Contributions hybrid with changes at this valuation to keep contributions at the current level with a proposed salary threshold of £40,000.
• A major new review of the scheme’s governance.
• Begin exploring a move to a conditional indexation model collaboratively designed through the suggested establishment of a joint member/University and College Union (UCU), employers, and USS working group.
• Addressing the scheme’s high opt-out rate by offering eligible members a new lower contribution option.
• A commitment to consider improvements to benefits should the scheme’s financial situation get better rather than reducing contribution rates.
These proposals will now be discussed over the coming weeks with the UCU, representing members, UUK, and USS at the Joint Negotiating Committee, which is responsible for approving any scheme rule changes and concluding the 2020 valuation.