Staff who are members of the Universities Superannuation Scheme (USS) will have received an email from USS in the last week informing them of an employee pension contribution increase from 1 October 2019. We understand that pensions are an incredibly important part of your remuneration package and this message aims to keep you further informed of the facts and figures.
That communication informed USS scheme members that employee pension contributions will increase from 8.8% to no more than 9.6% of salary from 1 October 2019 until October 2021. The increase in pension contributions, which derives from the 2018 valuation of the scheme, is a lower increase than originally proposed by the USS. This change in contributions will be reflected in your October salary.
The 2017 valuation initially proposed employee contributions rising to 10.4% from 1 October 2019 then further rising to 11.4% from April 2020. However, the 2018 valuation has revised pension contribution increases to a new lower maximum figure of 9.6% from 1 October 2019, with no further contribution increase in April 2020. The 9.6% contribution will be effective until October 2021.
The University’s pension contributions will also increase from 1 October 2019 from 19.5% to 21.1%. For our University this increase in employer pension contributions equates to a further £5m per annum from the 2018 levels. We are monitoring rises in pension costs carefully and the increased cost has been worked into our budget and business planning processes.
Although pension contribution increases will not be welcomed by staff the costs of pensions has risen and USS has calculated that the overall contribution rate required of members and employers to fund the pensions being promised is 30.7% of pay until October 2021 and 34.7% thereafter (subject to review under a 2020 valuation). Importantly there are no changes to member benefits proposed by USS.
On Thursday 22 August, the 2018 valuation and negotiation of the Universities Superannuation Scheme was conducted between the University employers (UUK) and the UCU through the USS Joint Negotiating Committee (JNC). UUK reported on 30 August that,
“During the discussions, Universities UK offered members a lower contribution rate of 9.1%, subject to consultation with members and employers, if the union agreed not to proceed with the planned ballot on industrial action, due to start on 9 September.
“UCU negotiators indicated they were unwilling to compromise, refused to consult their members over the alternative offer, and consequently rejected it. Our offer would result in a lower member contribution rate of 9.1% – exactly aligned with the rate proposed by the Joint Expert Panel in its first report, which employers and the union support.
“The USS JNC decided to split contributions into the scheme with employers paying in 21.1% of salary and members 9.6% from 1 October 2019. This decision was taken by the Committee’s independent chair and supported by employers to avoid the much higher contribution rates that would have come into effect from October (22.5% for employers, 10.4% for members).”
We will continue to keep you updated in our regular communications and notify you of dates for USS Members’ events that we will organise in the autumn.