Our University has a strong commitment to provide the best possible package of benefits for all groups of staff. Our pension schemes are an important part of this.
The Universities Superannuation Scheme (USS) is a national pension scheme for the sector with more than 390,000 members, from over 300 universities and associated institutions. The membership at Southampton includes many of our staff, at grade 4 and above.
The USS trustees are required to conduct a valuation of their scheme every three years. This is a detailed analysis of whether the scheme has appropriate assets to cover an estimate of future liabilities. The valuation must include the scheme actuary’s estimate of the solvency of the scheme.
After the 2014 USS valuation, when the scheme was found to be in deficit, a recovery plan was put into place. The USS trustees have indicated that the 2017 valuation, once completed, will find that the scheme is still in deficit and further action will be required. A new deficit recovery plan will need to be set out by USS in early 2018.
What happens next?
Universities UK (UUK) is the body representing the views of universities. Their current role is to understand the potential impact of the valuation and the views of the employers they represent.
USS trustees recently consulted with employers via UUK on the technical assumptions for the valuation. Employers were asked to complete a survey to give their views on some of the options that may be considered by USS as part of the deficit recovery plan. For example, the consultation asked for employer views on the level of risk that we feel it is appropriate to take in order to fund the scheme, on increasing employer and employee pension contributions and on changing member benefits.
Universities UK will use the inputs to this survey to inform the employer position to submit to USS who will consider this response.
What were the key points in our University’s response to the UUK employer survey?
- We currently contribute the equivalent of 18% of salary in pension payments to staff who are members of USS. As part of our overall Reward package for our staff and given forward financial planning, we have indicated that this is the most the University is able to pay.
- Colleagues who are members of USS currently contribute the equivalent of 8% of salary to their pension. We believe that increasing employee contributions to over 8% would lead to more employees dropping out of the scheme. This is something we don’t want to see happen. We want to offer a USS scheme that is attractive to our staff and which will be a sustainable part of our employees’ financial planning.
- We have advocated that changes to member benefits, such as changes to the pension calculation or a further reduction in the defined benefit salary threshold, reduces substantially the attractiveness of a residual defined benefit scheme. We welcome the exploration of sustainable options by USS that will provide an attractive pension to our staff, whilst giving flexibility and encouraging younger staff to join the scheme early on in their careers.
How we feel about our response to the survey
Chief Operating Officer, Ian Dunn, comments:
“We remain committed to providing the best possible pension benefits for our staff, in the current internal and external context. For example, we have advocated for measures that will encourage younger staff members to join a scheme early.”
At this stage there are no changes for staff contributing to the USS pension scheme. The University will ensure any changes proposed by USS are communicated to staff who are members or potential members of this pension scheme. Any changes proposed by USS to members’ benefits or employer contributions will require a formal consultation which, if required, is likely to happen in February/March 2018.
More information about USS can be found on their website.
