Earlier this year, initial results were released for the 2023 USS valuation which has shown a strong improvement in the funding level of the scheme.

Given this, and in keeping with the joint statement announced by UUK and UCU earlier this year, proposed improvements have been made for benefits to return to pre-April 2022 levels, with effect from 1 April 2024.

Further to this, the required level of contributions is also expected to fall.

In order for this to occur a consultation is required with active members of the USS Pension scheme and those eligible to join.

The consultation opens on Monday 25 September 2023 at 9am. The closing date for responses is 5pm on 24 November 2023. Please do take this opportunity to contribute your views on this important issue.

This member consultation seeks comments on these potential benefit changes (details below) which, subject to the appropriate governance process, will then see an update to the scheme rules and implementation in due course.

Summary of proposed changes

1. Salary Threshold

The salary threshold is currently £41,004. For salary up to this point you currently accrue benefits in the defined benefit part of the scheme, with any contributions above this going towards the defined contribution part of the scheme. This currently increases annually in line with inflation (CPI), capped at 2.5%.

It is proposed that this increases to within the range of £66,000 – 73,000 (the exact figure will be known on publication of the annual rate of inflation to September 2023). Furthermore, the cap will increase annually in line with inflation, subject to the following where:

• CPI is 5% or less, increase will be matched in full
• CPI is >5%, but <15%, increase will be 5%, plus ½ of the increase over 5%
•  CPI is >15%, increase will be capped at 10%

 2. Better accrual rate

The current accrual rate is 1/85^th of salary (up to the salary threshold), plus a 3/85^th lump sum. This is proposed to improve to 1/75^th of salary (up to the salary threshold), plus a 3/75^th lump sum.

3. Higher cap for future pension increases

This currently increases annually in line with inflation. As part of the changes introduced in 2022 this was due to be capped at 2.5%, but its introduction was deferred with the following in place since then:

• Where CPI is 5% or less, increase is matched in full
• Where CPI is >5%, but <15%, the increase will be 5%, plus ½ of the increase over 5%
• CPI is >15%, increase will be capped at 10%

As part of the changes, it is proposed that the above is formally adopted back into the Scheme rules.

Consultation

We would encourage all relevant individuals to visit the consultation website, where you can find out more about the changes, use the modelling tool, and also give an anonymous response on your thoughts to the proposals.

All responses received during the consultation period will be considered and a summary of these will be fed back to the appropriate governing bodies.

Should you prefer, you are also free to give a response direct to the university.

Further information is published at USS resources and more background to the 2020 scheme valuation is published at USS 2020 Valuation.