Employers are calling on union representatives to join them in shaping and overseeing important changes to the USS pension scheme.
As part of the employer reform proposal passed on 31 August 2021 at the Joint Negotiating Committee – the forum for agreeing changes to the scheme – there was a commitment to hold a thorough governance review, explore alternative scheme designs and take urgent steps to reverse the high employee opt-out rate.
USS employers want to work together with representatives of the University and College Union (UCU) in three areas:
- A taskforce of employer, union, and USS representatives, and their actuarial advisers is swiftly being established to explore alternative models for scheme design (Conditional Indexation, for example) that could potentially offer enhanced benefits and better value for money.
- Employers have invited UCU representatives to join a tripartite task and finish group along with USS to urgently progress work on high-quality, lower cost pension options, which is an important part of the employers package of proposed reforms. This would give staff flexibility to pay in less than the current mandatory rate of 9.8% of salary, and still benefit from a generous employer contribution towards their pension. Employers have asked USS to model defined benefit options (offering members a set amount of pension benefits) and defined contribution options (a pension based on how much is paid in and how well investments perform) for union and employer representatives at the Joint Negotiating Committee to discuss and explore which options best fulfil the needs of members currently choosing not to be in the scheme.
- Employers believe a governance review, carried out with independent expertise, is long overdue and want to work with the UCU and the USS Trustee to take this forward as soon as possible so the scheme better serves the interests of members and sponsoring employers.
A Universities UK spokesperson, on behalf of USS employers, said:
“We’re creating a better and more inclusive pension scheme which is affordable for early career staff, exploring how scheme redesign could offer enhanced pension benefits and better value for money for members and employers, and establishing an independent review of scheme governance. We expect that the UCU, which represents all scheme members, will want to play a full part in these important discussions and decisions. There are many issues like these where employers and their staff agree that change is necessary and by working together quicker progress can be made.”
Notes to editors
- USS is one of the largest private pension schemes in the UK and is the principal scheme for academic and comparable staff in UK universities and other higher education and research institutions. Universities UK represents the views of 340 higher education employers on USS.
- Conditional Indexation (CI) involves annual increases to pension benefits – above any statutory minimum increases – may be dependent on scheme investment returns and not guaranteed. (This may be considered, for future benefits, by stakeholders after the 2020 valuation.)
- Around 20% of members are currently choosing not to join the scheme and losing out on the 21.4% employer contribution, leaving them without any pension savings for their future.