Human Resources

USS – 2020 valuation

Find out about the USS pension scheme and why a valuation of the scheme is being carried out.

Pension schemes at Sussex

There are three different pension schemes at Sussex, depending on your role:

This page relates only to the USS scheme.


Last updated: 2 September 2021

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. It is also one of the most generous; the average USS pensioner receives around £19,000 a year in retirement, almost three times the average for similar pensions in this country.

Every few years, the financial health of the scheme is assessed to make sure there is enough money in it to cover all the benefits that members (you) are accruing. This is called a "valuation".

Because of a number of factors, the scheme is becoming more expensive to run and less affordable for both employers (340 organisations, including Sussex) and members. This has become more pressing since the Covid-19 pandemic and other financial pressures came into play.

Over the past decade, contributions from employers have risen by 50%. Member contributions have increased, too.

This is leading to more staff opting out of the scheme, leaving them without adequate – or even any – retirement benefits or life cover.

This is a national issue, which requires a national solution. Sussex represents about 0.7% of all USS scheme members. While we can only play a limited role in the discussions, we want you to have the full picture.

Last valuation

The last valuation of the USS scheme concluded in 2018. This led to some increases that were pre-determined. More are due this October, but the USS Trustee (a national group) aims to complete a new valuation beforehand, although this is not guaranteed.

The USS Trustee has decided to do this because:

  • it committed to carrying out a 2020 valuation after the last valuation in 2018
  • the next increases in October will be prohibitively higher for members (you) and employers (like Sussex).

Five years ago, the member contribution was 6.5% while employers paid 16%; last year members paid 9.6% while universities made a contribution of 21.1%. We cannot continue at this trajectory.

The USS Trustee is one of four groups involved in valuations – skip to who does what.

This graph shows how pension contributions from employers and members have risen over the period from 1975 to the present day. Member contributions have risen from 6.25% to 9.6%. Employer contributions have risen from 12% to 21.1%. This means the total rise over this period is 18.25% up to 30.7%.

You can view a full-size image of a graph showing contributions since 1975 (not fully accessible content).

What’s happened so far?

The Trustee published a report [PDF] in March 2021 setting out the price of maintaining the current benefits of USS.

In it, the Trustee indicated that pension contributions would need to rise sharply to maintain existing benefits.

You can read the Trustee’s statement about its report on the USS website.

You can also read responses to the report from the University of Sussex Vice-Chancellor, UUK and UCU.

UUK wrote to the Trustee asking it to review its valuation calculations. The Trustee responded to that request.

While it continues to push the Trustee to address concerns about the valuation, UUK recently concluded a consultation with the 340 organisations, including the University of Sussex, who are USS employers. You can read the University’s consultation response [login required]. The outcome of the UUK consulation was that employers backed a series of proposals for medium and long-term reform of the pension scheme. UUK then asked the USS Trustee to price its proposed new model

The USS Trustee responded to UUK's request, stating that it considered the proposed benefits could be provided for an overall cost of 31.2% of salary (therefore, a rate 0.5% higher than current contributions). To reach this price, the USS Trustee sought further commitments from employers. UUK launched a short consultation with employers to seek their views on this. 

Employers in USS, including the University of Sussex, agreed to make even stronger promises to the scheme to provide defined benefit pensions at affordable levels for scheme members and employers. The University can confirm that it voted in favour in its response to the UUK consultation approved by Council at the start of July 2021.

The additional financial backing – or covenant support – would save members and employers from contributions rises up to 80% higher after the USS Trustee confirmed the additional support would allow it to price Universities UK’s proposed alternative package at contributions very close to current levels.

What's happening now?

On 31 August 2021, the JNC decided to progress with UUK's alternative proposal. A 60-day consultation will take place with members and representative bodies about the proposals. This is expected to happen in autumn 2021.

In addition, on 3 September 2021 the USS Trustee board agreed to take forward the Joint Negotiating Committee’s (JNC) recommendations for concluding the 2020 USS valuation. This means that, subject to consultation, the steep contribution increases from 1 October 2021 can be avoided.

Webinars

We are updating staff through webinars. You can log in and view past webinars and read questions people have asked.

When the valuation will be finalised

The current expectation is that the valuation process will not conclude until late 2021 or early 2022. This means that the cost of pension contributions will almost certainly rise in October (to 11% of salary for individual members with a University contribution of 23.7%).

The earliest date any changes to benefits could be introduced would be Friday 1 April 2022.

Who does what

There are four key stakeholders who have a role to play in a potential valuation outcome:

  • The USS Trustee is responsible for the management and administration of the scheme and has a duty to act in the interest of all scheme beneficiaries. It is the Trustee that calculates and sets the required levels of contributions.
  • Universities UK (UUK) represents all 340 participating employers in USS. It consults with them to determine a position whenever the USS Trustee issues information and is responsible for communicating the views of employers back to USS.
  • The University and College Union (UCU) represents the scheme’s members. Along with UUK, UCU sends representatives to the Joint Negotiating Committee (JNC) to decide how the level of contributions required by the USS Trustee should be paid.
  • The Pensions Regulator is a public body that protects workplace pensions in the UK, by working with employers and those running pensions to ensure that people can save safely for their retirement. A submitted valuation must meet the Regulator’s approval.

More

Here are the relevant documents and links relating to the valuation: