We’ll only have a handful of members who are members of the USS, but if you are, this is important:
Universities Superannuation Scheme (USS) At a meeting of the USS JNC yesterday, 23 January, Universities UK, on behalf of the university employers proposed changes to the scheme that would move all future accrual from April 2019 to a defined contribution scheme. With the support of the Independent Chair, these changes were agreed. The changes are in response to the increased in the deficit in the USS and are likely to result in a severe reduction in future benefits for all members of the scheme. Employers Proposals From 1 April 2019 (at the earliest):
- The salary threshold (the salary up to which defined benefits currently build up) will reduce to zero, subject to review at future valuations;
- Future benefits will be built up in the USS Investment Builder (the defined contribution part of the scheme);
- The employer contribution will cover the cost of future benefits in the USS Investment Builder, death and incapacity benefits, investment management charges, deficit recovery contributions, and scheme running costs;
- Members will contribute 8% of pay, but will have access to a lower cost option of contributing 4% while still receiving the full employer contribution into USS Investment Builder;
- The ‘match’ – the additional 1% employer contribution currently available – will be discontinued from the date at which the changes take effect.
What this means for members of the scheme Benefits already earned by both active and deferred members are protected by law and in the scheme rules. Benefits already being paid to retired members are not affected by these changes. This means that benefits in the scheme earned up till April 2019 will not be affected. From April 2019 the scheme will become a defined contribution (DC) scheme only. This means that instead of having a guaranteed income on retirement, the pension that members receive will be based on a annuity that will be dependent on the investment performance of the scheme and the annuity rates payable at the time of retirement. Effectively this transfers risk to individual members of the scheme from the employers. Whilst combined employer and employee contributions will remain at their current level (18% for employers, 8% for employees), DC schemes normally result in lower pensions for members. It is likely that these changes will impact most on the youngest and lower paid members of the scheme who can least afford a reduced pension. Scheme Consultation Arrangements USS are required to run a statutory consultation on the changes to the scheme. This consultation will take place later this year. The university as the employer in the scheme will organise the consultation in each individual institution that participates in the scheme. Employers are encouraged to hold meetings with all members of the scheme and all recognised unions, including UNISON. The employer is required to:
- Provide written information to all affected employees details of the proposed changes
- Undertake a consultation with affected employees and their representatives
- Provide a report to the USS trustees of the views expressed by the trade unions and members, including oral responses received at consultation meetings
UNISON response UNISON is extremely disappointed at the outcome of these negotiations. We believe that it should have been possible to negotiate a settlement that protected a significant element of the Defined Benefit Scheme. We believe that the changes proposed by the employers are unnecessarily severe and will result in significant detriment to scheme members. We will continue to campaign for these proposals to be reversed and call on all parties to re-enter negotiations. However, UNISON has not been party to the negotiations as UCU have sole negotiating rights in the scheme and were not consulted by UCU over any counter proposals. As you may be aware, UCU have already balloted members over the proposed changes and have announced their intention to take strike action in at least 61 HE institutions that offer USS to staff. It is likely that further details on the dates for industrial action will be announced shortly. The UNISON Higher Education Service Group have agreed to consult UNISON members who are members of the USS about balloting for industrial action to oppose these changes. We will write again shortly with further details on the consultation. It is very important that branches identify all members that are part of the scheme and update the RMS/WARMS to ensure that they are able to participate in any ballot for industrial action. If you have any questions concerning the USS or require further information, please contact Ben Thomas b.thomas@unison.co.uk