The USS Trustee has today published its Technical Provisions consultation on the assumptions to be adopted for the 2023 valuation. USS members and employers can look forward to significantly lower contribution levels and improved pension benefits.
Earlier this year, University and College Union (UCU), representing all scheme members, and Universities UK (UUK), on behalf of the 330 scheme employers, agreed a series of joint commitments to enhanced benefits, reduced costs and long-term stability to try to end the unsettling cycle of change every three years. Today’s valuation outcome signalled by the USS Trustee means that we can expect benefits to improve to those which existed before April 2022 and total contributions to fall to a total of 20.6% of salary (from the current 31.4%), with rates of 6.1% for members and 14.5% for employers for at least the next three years.
Today’s consultation further highlights the improved financial position since the last valuation in 2020. We will review the details with employers, and for now we reiterate our view that this consultation should provide the necessary stability and therefore the strong foundation which will allow us to consider scheme improvements.
Universities UK will now consult employers and continue joint work, with the UCU, to bring about positive scheme changes as soon as we are able.
Vivienne Stern MBE, Universities UK’s Chief Executive, said:
“The extraordinary transformation in the scheme’s financial position has been caused by the rapid and substantial rise in interest rates and, to a lesser extent, by the changes to the pension scheme, which were necessary following the 2020 valuation when the USS Trustee projected a bleak picture. We should also recognise the covenant support which USS employers have felt able to provide to the scheme, this being another major factor in the improvements which we can now see.
“Figures today from the USS Trustee on the 2023 valuation point towards union and employer representatives being able to take forward their agreement on creating stability, lowering contributions, and improving benefits. This will make a big difference to staff in this cost-of-living crisis and to USS employers faced with significant budget pressures.
“We also want to end such volatility between valuations. UUK has been exploring alternative scheme designs such as Conditional Indexation, which could provide added stability, as far as is possible with Defined Benefits, along the lines successfully implemented in Canada over the last decade.
“The scheme should offer more flexible options, for example to encourage younger members facing many other cost pressures to save for a pension with a valuable employer contribution. We also hope to progress an independent governance review of USS, with involvement from UCU, which could be crucial to improving how the scheme operates, how decisions are made, and to the success of stability measures such as Conditional Indexation or other alternative scheme designs.”