Will Spinks has been involved in USS for around 12 years, initially as an employer-nominated member of the Joint Negotiating Committee (JNC) and, since 2018, as an employer-nominated non-executive director of the USS Board. Will is a pensioner member of the scheme having worked as the Chief Operating Officer of Loughborough University and as the Registrar, Secretary and Chief Operating Officer of the University of Manchester. Will chairs USS’ Remuneration Committee and is a member of the Pensions Committee and Advisory Committee.
Prior to joining the Higher Education sector, Will worked for ICI, Zeneca and AstraZeneca in the UK and the USA. He was also an employer nominated non-executive director of the AstraZeneca pension fund.
Through 2024 and 2025, a range of 50th anniversary dates are of note for Universities Superannuation Scheme Limited (USS), from its incorporation in April 1974 through to the first members being accepted into the scheme in April 1975. As an employer-appointed non-executive director of the trustee company, I was asked to present my perspective of the scheme to help mark its golden jubilee.
In the 50 years since it was formed, USS has grown to be the UK’s largest private defined benefit (DB) scheme in the UK by way of assets - with assets under management at around £75bn - and now has around 550,000 members.
USS has, of course, grown and developed alongside the Higher Education (HE) sector that it was set up to serve. It is quite remarkable, however, that it has persevered, adapted and survived as a (largely) DB scheme when, all around it, similar such schemes have first been closed to new members and then closed to future accrual by existing members. According to the Pensions Regulator, only 4% of UK private DB schemes remain open to new members and USS accounts for half of the people still actively paying in to an open DB pension scheme in the UK.
The scheme’s success has only been achieved by the commitment over time of its stakeholders, employers and members, now represented by the Universities & Colleges Employers’ Association (UCEA) and the University and College Union (UCU) respectively.
Anyone seeking the precise detail of the establishment of the scheme can dive into Sir Douglas Logan’s book. A much shorter and more accessible version of the history can be found, however, within a section of the Higher Education Policy Institute’s Report 115 written by Nick Hillman.
For a blog-friendly summary, when USS was formed, three key objectives influenced stakeholders in the design of the scheme:
- Stakeholders wanted a scheme that resulted in an acceptable income in retirement that was protected in some way against inflation.
- Stakeholders wanted a scheme that allowed staff working in HE the opportunity to move between institutions without any financial penalty arising from having to leave one pension scheme and join another.
- Stakeholders wanted a pension scheme that helped to attract and retain high quality staff.
They wanted a scheme that was “among the most generous of its kind in the country”.
So, on our 50th anniversary, how are we doing?
- Current scheme design results in members building up, every year, a block of pension based on 1/75 of your salary (up to the salary threshold). Importantly, members also get a one-off cash lump sum (tax-free up to a certain limit) of three times annual pension amount to take at retirement. The pension that is built up will also go up in line with USS standard pension increases. The degree of protection against inflation differs between pre-October 2011 and post- October 2011 service but currently is capped at 10% (the first 5% matches the increase in official pensions, with half of the excess above 5% matched to a maximum of 10%). USS’s founders would, I believe, be pleased to see this level of benefit particularly when compared to what the majority of UK employee receive.
- The number of HE and HE-related employers participating in the scheme has grown significantly over the years and now stands at around 330 employers. This means that, once in the scheme, the possibility of members being able to remain in it when moving to another employer within the HE sector, is significantly increased. This was one of the key design features that the scheme’s founders sought to deliver and it has grown in scope as the number of participating employers has grown. This offers significant value to members.
- There is strong support from employers for USS and the importance of a sector-owned and led scheme. Employers are proud of their ability to provide a significant pension scheme as part of their total reward offer. A key priority for employers is maximising the value of total reward within HE and UCEA has prioritized supporting employer aspirations to enhance the overall employee experience. The commitment of employers to USS is a significant element of this.
What challenges does the scheme need to prioritise?
USS will always face numerous challenges but there are, I believe, two that are key for the scheme to respond to in order to continue to meet the founders’ original objectives: volatility and participation.
- A key challenge for any open DB pension scheme in the UK is stability over time. Significant movements in macroeconomic factors combined with the regulatory regime within which UK pension funds are required to operate mean that there is significant potential for volatility between the, at least, three yearly valuation processes that private DB pension schemes, such as USS, are required to go through. This is a key reason why only 4% of UK private DB schemes remain open to new members. USS has not been immune to this volatility and this has led to conflict within the sector. Both UCU and UCEA (and UUK before them) are committed to continuing to work together to ensure the stability of benefits and contributions at future valuations and this work is being progressed through the Stability Working Group. The trustee is actively supporting stakeholders in this process.
- All employers must provide a workplace pension scheme. Your employer must automatically enrol staff into a pension scheme and make contributions to your pension if you are classed as a worker and you are aged between twenty-two and State Pension age and you earn at least £10,000 per year and you usually work in the UK. Automatic enrolment began with a phased introduction in 2012. Many USS employers use the USS scheme to fulfil this obligation for academic and related staff. Some use it for all their staff. Staff have the right to opt out of this process and, because of financial pressures or believing the scheme is not for them, some choose to do so, despite the benefits available. This means that they don’t receive the benefit of their employer’s contributions (currently 14.5%), may miss out on the tax relief on their employee contributions (currently 6.1%), won’t therefore build up their USS pension in retirement and won’t receive the life cover of three times salary that membership of USS additionally provides. The level of opt outs is, therefore, an issue for the fund. This has been as high as about 15% in recent years but now appears to have fallen back to a more typical level of around 10%. Whilst the fall is to be welcomed, an ongoing opt out rate of around 10% still feels too high and would be a disappointment to the founders who lived in a world where opting out of the scheme was not a possibility. The trustee is keen to support the stakeholders in understanding why people are opting out and in finding ways to ensure all eligible staff make informed decisions and are supported in saving for their retirement.
So, at its 50th anniversary, whilst USS would probably be unrecognisable to its founders in its size and complexity, it would, I hope, be very much in keeping with their original vision.
This blog was first published by USS on 1 April 2025