March 2022 – April 2022
On 2 March 2022, the USS Trustee confirmed that the recommendations for concluding the 2020 USS valuation, formally approved at the JNC in February 2022 would be implemented from 1 April 2022, with one modification.
After taking on board feedback from the employer consultation with members and representatives, the JNC recommended to the trustee a delay to the reduction to the inflationary cap on pre and post retirement increases on benefits in the Retirement Income Builder accrued on and from 1 April 2022, up to and including 31 March 2022 and the increases to be applied to those benefits on the 1 April 2022, 1 April 2023 and 1 April 2024. The contribution rate for members will remain at 9.8% from 1 April 2022.
All other proposals remained unchanged.
A formal consultation took place with USS employers on the UCU’s alternative proposal to complete the 2020 valuation. The consultation asked employers to confirm whether they would provide the necessary covenant support and additional costs associated with the proposal which USS employers declined due to current contribution rates being at the limit of affordability and sustainability. Paying more would have a significant and detrimental impact on the sector’s collective ability to deliver high quality education and research. Details of the proposal can be seen on the USS employers and the UCU website.
November 2021 - January 2022
A 60-day formal statutory consultation began on 1 November 2021 until 17 January 2022 around proposed changes to the benefit structure of the scheme. Most changes are likely to take effect from 1 April 2022.
There must be an outcome by the end of February 2022 to meet the Pension Regulator (tPR) and USS timescales otherwise significant increases for both members and employers will be imposed of 18.8% for members (from 9.8%) and 38.2% for employers (from 21.4%).
March 2021 – October 2021
In response to the valuation, UUK suggested a way that benefits could be changed so that contributions did not have to change, alongside a proposal strengthening scheme support, lower cost and flexible options to tackle high levels of opt outs from the scheme and a governance review. UUK also continued to challenge USS on the initial calculations behind the valuation. UUK conducted two consultations with employers during this period to gain their views.
At Kent, views of members gained from surveys and from representatives at the sub-JSNCC group were used to feed into the response. The proposal put forward by UUK was seen as the ‘least worst’ option whilst allowing members to retain a degree of Defined Benefit accrual, something expressed as important to them in any future scheme.
In August 2021, the scheme Joint Negotiating Committee (JNC) voted to progress the UUK proposal. There was no alternative or counter proposal from UCU. Benefit reforms, if agreed following consultation, will see the salary threshold (the threshold below which benefits are built up) reduce to £40,000, the build up rate of pension reduced from a 75th to 85th of salary each year and annual increases restricted to a maximum of 2.5%. Member contributions are 9.8% for members and 21.4% for employers.
UCU were not in favour of the JNC’s decision and in their press release on 31 August 2021 set out a proposal which has not formally been presented to the JNC. This included a £40,000 salary threshold, build up rates of 80ths rather than 85ths, no restriction on annual increases and a reduction in member contributions to 8.1% and an increase in employer contributions to 24.9%.
You can see more information about the proposed changes to scheme benefits by the JNC on the USS website.
The USS Trustee has now published its scheme valuation for 2020 which propose three pricing scenarios which could see overall contributions rise from the combined rate of 30.7% of salaries to a maximum of 56.2%, dependent on the amount of support for the scheme provided by USS employers. Contributions, even in the best case scenario are deemed unaffordable for both members and employers.
January 2020 – March 2021
Following the JEP's second report, it was announced that the University and College Union (UCU), Universities UK (UUK) and USS would hold talks facilitated by JEP chair Joanne Segars. The talks have been set up to agree the approach for progressing the report’s recommendations. Between January and March, a number of meetings took place – notes from all these meetings can be found on the USS Employers website. Further details are available in the press releases from UUK and UCU. The first of three consultations on the Joint Expert Panel’s (JEP) second report, and the 2020 valuation – seeking initial views on the JEP’s recommendations to inform the development of options for the 2020 and future valuations – ran until 28 February. Later phases will involve regional seminars and a more detailed look at the options for changing the valuation methodology and the impact on contribution rates. UUK have published a Q&A document which you may find useful. In early 2020, UCU re-balloted staff at a number of institutions to ask if they would be prepared to take part in industrial action on the USS pensions dispute. At Kent, the turnout was below the threshold required for lawful industrial action. However, a number of other higher education institutions did take part in strikes on USS pensions between 20 February and 13 March 2020.
On 4 December 2019 UCU started re-balloting it's members in Kent and at other institutions on the issue of USS pensions. The results of the ballot will be announced in late January. 13 December saw the publication of the second report of the Joint Expert Panel (JEP).
September - November 2019
The UCU ballot on pensions was a 'disaggregated' vote, meaning that each institution was polled separately. Forty-six institutions achieved the turnout and positive vote required for lawful industrial action. At Kent, the turnout was below the 50% threshold required for lawful industrial action. A separate ballot on pay and conditions did reach the turnout required for industrial action at Kent. Off the back of institutions voting for industrial action both on pensions and pay and conditions, UUK and UCEA published a joint open letter to affected staff proposing a way forward in both disputes. USS Employers, which represents employers in the USS scheme, also wrote to UCU to formally outline their formal commitment to continuing to work with the union to deliver long-term reform of the USS scheme.
In January, the USS announced that as no agreement had been reached it would increase contributions. The rates were slightly lower than previously suggested and spread over two years. If the employers and UCU reached agreement over the March 2018 valuation, this would serve to mitigate or avoid these increases. In February, the JEP started work on the second phase of its valuation. In May, the USS put forward three options finalising the 2018 valuation, Each option included varying degrees of increased contributions for both employers and members. The UCU's policy of 'no detriment' led to it warning of renewed industrial action if increased member contributions and decreased benefits were not ruled out. The employers suggested a failure to increase member contributions would see the return of the large increases proposed under USS rule 76. UCU argued that the increases required could be carried entirely by the employers. In August, the employers suggested a variation on the third of the options presented earlier in the year. This would see employers contributing 21.6% and members 9.1% with a review in 2020. The proposal included the condition that the USS ballot for planned industrial action would be cancelled. The UCU saw this as a move to ban strike ballots for two years, an interpretation rejected by the employers. As a result of this impasse, the JNC adopted the revised Option 3 and the UCU balloted for industrial action. The JEP’s second report will be published this autumn. The employers have stated a desire to work collaboratively with the UCU to jointly consider the report, with a view to identifying a long-term solution to the scheme.
As a way to resolve the dispute, an independent expert panel – known as the Joint Expert Panel (JEP) – was established to review the 2017 valuation. In March 2018, a new valuation process was triggered. In September 2018, the JEP’s first report recommended four areas where adjustments to the valuation could be considered, as well as highlighting the need to understand the higher education sector. These changes would serve to reduce the predicted deficit. Both employers and unions welcomed the JEP recommendations. However, the issue of the benefit contributions was down to the USS Joint Negotiating Committee (JNC), a panel of union and employer representatives with an independent chair. The JNC was unable to agree on how the 2017 valuation should be concluded.
March 2017-February 2018
In 2017, the Universities Superannuation Scheme (USS) identified a £7.5bn deficit in the Scheme’s finances. At the time, the employers in the scheme proposed capping employer contributions at 18% and changing the scheme from a defined benefit (DB) scheme to a defined contribution (DC) one. This included the option of reversing if the valuation improved. Many University and College Union (UCU) members went on strike in February and March 2018. The Union believed the Scheme’s financial position was healthier than was being suggested and that it should take more investment risk to reduce the deficit. By law, the 2017 valuation should have been completed by June 2018 and if it wasn't, the USS Trustee could trigger USS rule 76 - a rule to raise funds through substantially increased member and employer contributions. If triggered, member contributions would have risen to 11.4% and employer contributions to 24.9%. Universities UK (UUK), representing the employers and the UCU, suggested a new proposal to try and meet the valuation deadline. This was rejected by UCU members.