Threat to USS Pensions

1. Threat to USS Pensions

2. Threat to USS Pensions • Why? • USS calculate that the fund is in deficit • Calculation to be released end of 2014 • Deficit • expected to be in region of £7.5 billion

3. Threat to USS Pensions • Deficit • ? • ‘Deficit’ calculation • Cost of all future pensions • minus • Assets on 31 March • In reality, no real world scenario would make this calculation meaningful

4. Threat to USS Pensions • Deficit • ? • • The USS Trustees are also concerned about the risk that the deficit could continue to grow and aim to reduce the risk of this happening in the future. They propose to do this by reducing the investment risk that they take with the USS’s assets. • • If the USS Trustees’ proposals to reduce investment risk were to go ahead, this would increase the deficit from £7 billion to £13.1 billion. • http://www.employerspensionsforum.co.uk/en/pension-schemes/uss/briefing-on-the-uss--july-2014.cfm • Yes, you read that right. To address the risk that the • ‘deficit’ might grow, they increase the ‘deficit’. • They might do better to query the mode of • calculating the deficit of a scheme that is, in reality, • solvent and growing.

5. Threat to USS Pensions • Deficit • ? • In reality, your pension scheme has more going in than coming out • Go and see the proof for yourselves: • http://www.uss.co.uk/UssInvestments/Publications/ReportsandAccounts/Pages/default.aspx

6. Threat to USS Pensions • Remember 2011? • End to final salary for new entrants • Introduction of Career Average (CRB) tier for new entrants • Over 55s made redundant lost right to unreduced pension • CPI cap introduced to benefits(increase above 5% CPI halved) • We said if they get to impose CRB for some,they’d come back to impose it for all. Well…

7. Threat to USS Pensions • So what now for 2014? • Employers’ proposals: • •The final salary section of the USS will be closed to existing members. • • The final salary benefits that existing USS members build up before the date the changes are implemented will be calculated based on their individual salaries at the date the changes come into force and from that date on will be increased each year in line with the Consumer Prices Index (CPI). This means that benefits at retirement will no longer be linked to a member’s final salary at retirement. • • All members of the USS – both existing members and new members – will join the career revalued benefits (CRB) section of the USS for future service. • • Benefits in the CRB section will be based on the same accrual rate as currently – members will build up benefits based on an accrual rate of 1/80th of pensionable salary per year. Each year their benefits will be increased in line with CPI (guaranteed up to 5% with half of any additional increase in CPI up to 15% i.e. a maximum increase of 10% per year). • • However, benefits in the CRB section will only apply to salary up to a salary threshold (i.e. a fixed upper amount of pensionable pay). This threshold has not yet been set but, depending on affordability, Universities UK’s aim is to maximise the number of scheme members who will fall below the salary threshold.   • But that’s not all…

8. Threat to USS Pensions • 2014 • Employers’ proposals: • • A new section of the USS will be created that will provide ‘Defined Contribution’ benefits (which depend on the amounts contributed, the time they have been invested and investment performance; they are not guaranteed). • • Alongside the CRB pension, employees in the USS will be able to pay an additional contribution into a Defined Contribution section. • • Higher earning members whose salary is above the salary threshold will still build up CRB benefits (plus DC benefits on any additional contributions they make) on their salary up to the salary threshold, but their pension benefit on salary above the salary threshold will be covered by the new DC section.

9. Threat to USS Pensions • Defined contributions shift risk fully to employees. • If implemented, no doubt in three years they will return to remove all defined benefits and shift whole scheme to defined contributions. ‘final salary’ and ‘career average’ are both ‘defined benefit’ schemes.

10. Threat to USS Pensions • Conclusions: • We all are being expected to pay huge sums out of our future pensions to put together a fund to cover an impossible scenario. • Our employer endorses that.

11. Threat to USS Pensions • Illustrations of detriment from proposals

12. Threat to USS Pensions • Report from 19 September conference • Ballot opens 1 October, closes 20 October • ASOS ballot - the action will cover: • Student assessment and examinations activity • Covering for absent colleagues • Call-out cover • Staff appraisals • Job Evaluation

13. Threat to USS Pensions • Report from 19 September conference • Ballot opens 1 October, closes 20October • Members, with designated roles that don’t consist entirely of assessment and examinations work will not: • Set examinations or other assessable student work • Mark or examine any assessable work; • Provide guidance to students regarding marks, grades or assessed progress; • Process marks or assessments (including those dating from before the boycott); • Attend or participate in meetings where student work is assessed or examined; • Address feedback from external examiners.

14. Threat to USS Pensions • Ballot opens 1 October, closes 20October • Vote ‘Yes’