As part of the 2023 Universities Superannuation Scheme (USS) actuarial valuation process, USS has released a consultation on the proposed assumptions and Universities UK (UUK – the collective advocacy organisation for all UK universities) has asked all USS employers for feedback on the USS proposals, as well as inviting comments on a broader plan for the development, and reform, of USS. This is in order to seek rapid conclusion to the negotiation of the proposals between the University and College Union (UCU) and USS, and allow further work on the future of the scheme.
The University Executive Team (UET) and Sussex UCU met in a working group set up as part of the summer 2022 16-week process. We are in agreement on many of the points on which employers are being asked to respond. We set out some key highlights in response to the UUK consultation questions, and include the University of Sussex Consultation response submitted on 22 September 2023 in an appendix.
Sussex response
Both the University and Sussex UCU support the assumption set and draft valuation of the scheme on the understanding that they allow for an accelerated 2023 valuation timeline. Likewise, we both agree that UUK should continue all nine elements of the workstream in collaboration with USS and UCU wherever possible.
Both the University and Sussex UCU welcome the proposed reinstatement of pre-April 2022 benefits from April 2024.
The University’s consultation response stresses that stability of future contributions is important and, noting that modelling demonstrates that the costs for the same benefits may rise at a future valuation, urges the continuation of the Stability Working Group and the exploration of Conditional Indexation.
The University believes it is important that both members and institutions benefit from the pension benefits reinstated to April 2022 levels and from lower contributions. Any payment above that level at this stage provides no additional pension benefits to members; it only reduces (and only to an extent) the risk of higher contributions being required to fund the same benefits in future. It is not, in the University’s view, appropriate to speculate on future valuations but we have taken reassurance from modelling provided in the consultation. This USS modelling reports that, having paid contributions of 20.6%, the risk of contributions exceeding the current combined future service rate of 25.2% in three years’ time is much lower (24-40%) than that of exceeding 20.6% (57-65%).
Paying the rate defined by the trustee fully funds the benefits reinstated to April 2022 levels and allows members to benefit from lower contributions and institutions to pay less; this is important for both members and the University given the pressures of cost of living, inflation and interest rates for employees and employers. It also makes entry to the scheme more affordable for members who do not currently participate.
Though not part of the current consultation, the University has reaffirmed its support for the commitment to exploration of benefits augmentation for April 2022-April 2024 during the current valuation process.
Statement from Sussex UCU President Jo Pawlik:
“We welcome the new collaborative approach from UET on USS, and Sussex UCU has worked hard to represent views from across the whole campus.
"UET’s and Sussex UCU’s mutual support for fully restoring benefits on 1 April 2024 as well as the urgent need for action on fossil fuel investments have emerged as just two of our shared areas of agreement.
"There remain areas of divergence over stability of contribution rates, and the value of USS compared to public sector pension schemes. There is deep concern among members that cutting contribution rates too low will see a return to cycles of dispute. However, we recognise that UET supports the reference point of 25.2% to fund fully restored benefits at future valuations.
"We know that members will be encouraged by UET’s ongoing public support for the exploration of augmentation of lost benefits 2022-2024.
"As a branch we look forward to further collaborative local work regarding all aspects of USS. You can read Sussex UCU’s consultations and analysis on USS here."