USS Pensions Update

June 20th, 2019

The University has indicated it would support a plan by the trustees of the USS pension to maintain the current defined benefits scheme, avoid far higher automatic increases for both members and employers scheduled for October, and allow time for the Joint Expert Panel to secure its long-term sustainability and restore confidence in its governance.

The plan, known as Option 3, is supported by more than three-quarters of institutions that offer the USS pension to staff and would cost the University an additional £10 million in annual employer contributions to the scheme.

If agreed, this would mean a fixed increase in contributions for scheme members from 8.8% to 9.6% of salary, and for employers from 19.5% to 21.1%.

The alternative would be to default to the automatic contribution increases scheduled for this October of 10.4% of salary for scheme members and 22.5% for employers; and again next April to as much as 11.4% of salary for scheme members and 24.2% of salary for employers.

A fresh valuation of the scheme would take place in 2020, informed by recommendations from the Joint Expert Panel of UUK and UCU appointees to secure its sustainability and improve its governance.

Correspondence from the University to Universities UK and the University & College Union states:

“Of the three options presented by the USS Trustee to settle the 2018 valuation, the University of Nottingham is minded – alongside 85% of employers in the scheme – to support Option 3, subject to further assurances and consultation on the detail underpinning it.

While none of the three options are wholly ideal for employers or scheme members, Option 3 is the pragmatic interim solution in that it:

  • secures the defined benefit scheme with no changes to the current level of benefits for its members, at contribution costs limited to 21.1% of salary for employers and 9.6% of salary for members until at least the next scheme valuation;
  • avoids the far higher and legally required contribution increases, scheduled to rise in October to 10.4% of salary for members and 22.5% of salary for employers; and again next April to as much as 11.4% of salary for members and 24.2% of salary for employers; and, critically,
  • allows time for the Joint Expert Panel to consider and recommend much-needed longer-term reforms to the scheme – a position the University has supported throughout – for a new valuation in March 2020.

The University believes it is right to continue to follow established scheme rules in sharing costs between employers and the scheme members who will benefit from the pension.

The University continues to support the work of the Joint Expert Panel – there is little doubt at Nottingham that its expertise is required to secure the long-term sustainability of the scheme and restore confidence in its governance.

Our hope therefore remains that all parties can avoid the distraction and damage of industrial action, so that the Joint Expert Panel, Universities UK, University & College Union, the USS Trustee and the Pensions Regulator can – collectively – ensure the sustainability and affordability of the scheme in the interests of all of its members.”

Further information on the employer position is available at USS Employers and that of the union at University and College Union.

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