This is an update in a regular series of communications to update staff on the progress of the 2020 valuation of the USS pension scheme.
In this update:
- USS sets out how changes could impact your pension
- New UUK calculator shows how much more you would pay without reforms
- Trustee confirms contributions from 1 October 2021
- Trustee signals support for low-cost options, Conditional Indexation and governance review
- The Pensions Regulator “not comfortable with” but accepts JNC proposal
- A reminder of where to find resources
USS sets out how changes could impact your pension
The USS Trustee has set out how an individual’s pension could be affected by the proposed changes to the scheme.
It has created three personas showing the impact across different salaries and ages:
- A 37-year-old earning £30,000
- A 43-year-old earning £50,000
- A 51-year-old earning £70,000
The modelling shows that pensions on retirement would be lower for all three individuals but by nowhere near as much as the 35 per cent drop claimed by UCU.
A detailed modeller is being developed in time for the employer consultation with members later this year. This will give members a bespoke calculation based on their own circumstances.
New UUK calculator shows how much more you would pay without reforms
A new contributions calculator developed by UUK shows how much more USS members would be paying each month if employer-backed reforms do not proceed.
UUK is encouraging staff to consider the impact on their monthly USS contributions when assessing how the changes would affect them.
It has created a calculator, enabling staff to enter their salary and see at a glance how their monthly contributions would change if the proposed reforms are not implemented.
The calculator shows that contributions by October 2022 would increase by:
- £78 a month for a member earning £30,000 a year
- £129 a month for a member earning £50,000 a year
- £181 a month for a member earning £70,000 a year
Trustee confirms contributions from 1 October 2021
The USS Trustee has written to employers to confirm that, from 1 October 2021, contributions into USS will be 9.8 per cent for members and 21.4 per cent for employers. This is an increase of 0.2 and 0.3 percentage points for members and employers, respectively.
Contributions had been scheduled to rise to 11 per cent for members and 23.7 per cent for employers – a result of measures put in place to finalise the 2018 valuation.
These much higher contributions have been avoided now that the JNC has agreed to take forward UUK’s proposal for concluding the 2020 valuation.
Trustee signals support for low-cost options, alternative scheme designs and governance review
In its letter to employers, the Trustee also offered to support and engage with discussions around three areas of work where UUK and UCU have common ground:
- Development of a lower cost pension savings option and member flexibilities;
- Exploration and development of alternative scheme designs, such as Conditional Indexation; and
- A governance review.
The Pensions Regulator “not comfortable with” but accepts JNC proposal
The Pensions Regulator, which is legally responsible for making sure pensions are properly funded, has accepted the JNC’s proposal for concluding the 2020 valuation.
In a letter to the USS Trustee, copied to UUK and UCU, the regulator said that, while it is “not comfortable with” a combined contribution rate as low as 31.2 per cent, it does “not expect take further action”.
TPR has the power to intervene if it feels that a valuation could leave a scheme underfunded, so the letter this week is another step towards finalising the 2020 valuation.
A reminder of where to find resources
We are keeping up-to-date information about the 2020 valuation on our website. This includes links to key documents published by the main parties, as well as recordings of recent webinars.
If you have questions about your individual pension or circumstances, you can contact pensions@sussex.ac.uk.