The Universities Superannuation Scheme (USS) announced in early May that it would follow the cost-sharing process in order to complete the latest valuation of the scheme, and that this requires a statutory employer-led consultation. This is in parallel with, but entirely separate to, the work of the Joint Expert Panel (JEP) and the USS Trustees will continue to engage constructively with the JEP. The consultation will open on Monday 3 September 2018 and ends on Friday 2 November 2018.
Consultation packs for members and eligible employees will be sent to employers during the week commencing Monday 20 August 2018 and these will be distributed to members by Friday 31 August 2018. The consultation pack will contain a letter explaining the consultation, along with a leaflet about the proposed changes. Employees will be directed to the USS consultation website to read more information and make their response to the consultation. The website will be live from Monday 3 September 2018.
What is cost sharing?
The USS Trustees have an obligation to complete the current valuation process. Under the USS rules, if there is no agreement about benefit proposals, then the ‘cost-sharing’ rule (76.4-8) must take effect.
Under the cost sharing rule, any increase to the contribution rate required by the Trustees is split 35:65 between members and employers respectively. This could mean an increase in contributions for both members and employers. The full potential increase of 3.7% for members and 6.9% for employers would not be applied straight away but progressively over time from 1 April 2019. The Trustees must consult with members prior to implementation.
What is the work of the Joint Expert Panel (JEP)
The Joint Expert Panel is an independent group set up to look at the 2017 valuation and provide more clarity about the funding of the scheme. It is anticipated that the JEP will present their report about the valuation to the Joint Negotiating Committee (JNC) – made up of UUK and UCU – in September 2018. Recommendations will then be made about the future of the scheme to the USS Trustees and the Pensions Regulator. Any potential future changes to the Scheme would need to be consulted upon with members. It is unlikely that any new proposal will be implemented before April 2019.
Where can I find more information about my pension scheme?
In July we invited independent pensions expert, Brendan Mulkern to run a series of presentations for staff, setting out the latest developments related to the USS valuation. Brendan sets out the USS position following the 2017 valuation, the existing benefit structure and the potential areas in which changes have been discussed. He then explains the latest developments, the role of the JEP and the USS cost sharing rule 76. You can view the presentation here and scroll forward to 53’:05” for the section about cost-sharing.
More information about USS can be found on the Finance SharePoint site. This site also includes links to all SUSSED posts on pensions, UUK briefings and the USS 2017 valuation webpage.
