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Revaluation of USS Pension Scheme – Staff Briefing. April 2014 Richard Benson, Jo Brake-Oakes, John Garnham. Improving health worldwide www.lshtm.ac.uk. USS – overview of the scheme. USS is one of the largest pension schemes in the UK with 300,000 members and around £40bn of assets
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Revaluation of USS Pension Scheme – Staff Briefing April 2014 Richard Benson, Jo Brake-Oakes, John Garnham Improving health worldwide www.lshtm.ac.uk
USS – overview of the scheme • USS is one of the largest pension schemes in the UK with 300,000 members and around £40bn of assets • Established in 1974 as the national pension scheme for HE • Mutual or “last man standing” scheme with 390 employers – HE institutions, FE colleges, learned societies and others • USS is an independent company governed by a board of trustees, including: • 4 members appointed by Universities UK • 3 members appointed by UCU • 3-5 independents appointed by the board • Any proposals to change the rules of the scheme will be considered by the Joint Negotiating Committee of 11 members: • 5 appointed by Universities UK • 5 appointed by UCU • 1 independent, who acts as chair
USS – overview of the scheme • USS is a defined benefit scheme with two sections: Career revalued benefits section Open to members joining after Oct 2011 Final salary section Open to existing members Contributions Contributions Employer – pays 16% of salary Individual – pays 6.35% of salary Employer – pays 16% of salary Individual – pays 7.5% of salary Benefits Benefits Pension = average pensionable salary x 1/80 x pensionable service Pension = final pensionable salary x 1/80 x pensionable service + + Tax-free cash = 3 x pension Tax-free cash = 3 x pension
USS – revaluation • Pensions’ legislation requires all defined benefit schemes to conduct an actuarial valuation every 3 years • The valuation will assess the present value of the assets and liabilities of USS, including: • Will contain a large number of assumptions of how these factors & other may change over time • Small changes in assumptions can have a big impact on the size of the deficit • USS trustees will need to agree a Financial Management Plan with the Pensions Regulator to eliminate the deficit over a period of years • The Regulator will be looking at: • are the assumptions reasonable? • are employers able & willing to take the steps needed to reduce the deficit? • sustainability, including a new objective “to minimise any adverse impact on the sustainable growth of an employer”.
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