USS – 2023 valuation
Find out about the impact of the 2023 valuation and next steps.
Background of the USS pension scheme
The USS scheme has been in place since the 1970s. It is one of the largest private pension schemes in the country and provides retirement income, ill health benefits and life cover to hundreds of thousands of university staff in the UK.
Every few years, the financial health of the scheme is assessed to make sure there is enough money to be able to pay the Retirement Income Builder benefits that members (you) are accruing. This is called a "valuation". The latest valuation will be based on a snapshot of the scheme on 31 March 2023 (but relevant developments after that date will be considered before any final decisions are made).
This involves comparing how much money the scheme has at that date (its assets) with the total estimated cost of paying all the benefits on a prudent basis, that have been promised to members at that point in time (its Technical Provisions liabilities). If USS don’t think the scheme will have enough money to pay those benefits, they have to put a plan in place to fix that (known as a Recovery Plan).
USS also have to establish the overall contribution rate – described as a percentage of pay – they will need in future to fund the new benefits promised after the valuation date.
The benefits in question will be paid out over multiple decades, so USS have to make a number of assumptions about what might happen in the future.
There are lots of legal requirements and duties when it comes to holding a valuation – including the need to take a prudent approach to assessing how much money we will need. USS have to work within a robust legal and regulatory framework, overseen by the Pensions Regulator (who has the power to intervene in several ways if it considers that a valuation does not comply with the law).
Next steps
Once USS have established the funding position, and the overall contribution rate required for funding new benefits, the Joint Negotiating Committee will consider if it wants to make any changes to benefits and/or how any change in to the overall contribution rate is split between members and employers.
The valuation process itself will run into 2024 – as set out in the anticipated timetable. The legislative deadline for completing it is 30 June 2024.