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.”
ENDS
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.
