A focus on pensions – busting some myths
15 Mar 2022
Substantial USS increases now off the table – members’ contributions to stay at 9.8% with employers increasing to 21.6%
Given UCU’s decision to run a second re-ballot at the University on industrial action relating to changes to USS, we want to provide up-to-date information to ensure colleagues have clear, factual information to counter some of the misinformation that has been circulating.
We want our staff to have access to an attractive, affordable and sustainable pension which will provide for their retirement – and we would like to reassure colleagues of this in light of UCU comments and ballot plans over the outcome of the USS pension negotiations.
The USS Trustee has agreed to proceed with the employers’ proposals for concluding the 2020 valuation. This includes a compromise on postponing the lowering of the inflation cap until April 2025. Failure to conclude the 2020 valuation would have meant very substantial increases in payments for employees (to 11% of your salary) and employers (23.7%) next month and increases every 6 months thereafter up to a member contribution rate of 18.8% from October 2025. These increases would have been imposed had an agreement not been reached.
The substantial increases that were timetabled are now off the table – and the 2020 valuation will be concluded with a total combined rate of 31.4%. This will mean that members’ contributions will be maintained at 9.8% with employers increasing to 21.6% (from 21.4%).
Impact figures and the use of calculators
UCU headlines and their calculator have suggested staff in the scheme are facing a cut in their final pension of up to 35%.
Universities UK (UUK) and our University do not agree with that conclusion – the evidence for this is set out below.
It is important to remember that pensions built up to date are secure and won’t be changed. The pension also retains a significant defined benefit (DB) component, albeit lower than previously, and is one of the few private schemes of this type which are still open to new members and future accrual.
Following on from that, it is simply not true that staff in the scheme are facing a cut in their final pension of 35%, and it is important that members factor in the Defined Contribution (DC) pot (USS Investment Builder fund) in making any assessment.
Personas published by the USS Trustee suggest that the impact of the original UUK proposal would be a reduction in USS benefits at retirement of between 10% and 18% for a range of example members (not including State Pension). Whilst everyone’s results will be different, we would encourage you to use the USS calculator to determine your likely pension which is still available at the consultation website, acknowledging that younger members may see a higher reduction than the figures quoted above. Whilst we appreciate that nobody wants to see a reduction in their future pension benefits, it is clear that the alternative (significantly higher and unaffordable contribution rates for members and employers) would have been worse.
In conclusion
Adèle MacKinlay, Director of People and Organisational Development said: “We urge the UCU to work with UUK on behalf of the many employers in the USS. Workplace pensions are extremely important and there is a risk, through misjudged communications and the use of particular figures and headlines, that individuals might make pension decisions which have a lasting and detrimental effect.
“We know how valuable the pension is to our staff, so it’s important to us that the scheme provides attractive benefits and remains affordable and sustainable for all. We have been working hard to attain that for many months – we very much welcome the UCU playing its part in that process.
“It is disappointing that UCU intends to re-ballot its members on the USS pension when we have all worked hard to achieve the best outcome possible. We are obviously concerned that additional and on-going industrial action will have a further damaging effect after a significantly disrupted two years.”