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Important update for staff on USS pension valuation

During the summer the University has kept you informed of the latest developments in the USS pension valuation as there are significant implications for all USS members and the wider community.
This included a message from the Vice-Chancellor on why the University supports one of three options put forward by the USS Trustee – referred to as 'Option 3'. You can read this here.
You were also informed of the University’s response to a letter from the University and College Union (UCU) Head of Higher Education, Paul Bridge. You can read both of these letters here.
We updated you that as well as Sussex, the majority of employers also agreed to ‘Option 3’ which would maintain the current level of benefits for scheme members, with the increased costs continuing to be shared 35:65 between scheme members and employers. 
As a result, Universities UK (UUK) recently put forward the 'Option 3' proposal at the Joint Negotiating Committee (JNC) which includes the UCU, as part of urgent efforts to conclude the 2018 valuation. The proposal would result in a contribution rate of 9.6% for members (currently 8.8%) and 21.1% for employers (currently 19.5%). This would mean a USS member on the average salary would contribute £362 per month (pre-tax). USS institutions would need to contribute an additional £250 million per year. In order to avoid far higher contributions that would put pressure on staffing budgets for Sussex as well as many other institutions, the University hopes that the JNC will decide to proceed with this proposal at its meeting on 20 August 2019.
UCU remain opposed to this proposal and as such staff need to be aware that without agreement at the JNC the USS Trustee, on instruction from the Pensions Regulator, will likely enforce that both members' contributions and the University’s contributions rise significantly, based on the 2017 valuation that will legally stand. 
This would mean member contributions rising to 11.4% by April 2020 – and employer contributions rising to 24.2% by April 2020. The impact of these rises would be substantial for the sector, with USS institutions having to contribute an additional £500 million, the equivalent cost of over 11,000 job roles on an average salary. It would also mean the contribution of a USS member on an average salary rising to £430 per month (pre-tax).
The below tables illustrates the impact on a USS member, earning an average salary.

In his correspondence to UCU, the Vice-Chancellor expressed concern at the severity of these potential rises – and that without a rapid resolution to the 2018 valuation, there will be grave implications for both institutions and individual members if UCU do not adopt the proposal that has now been put forward. He stated: “The University of Sussex is in a position where we could absorb the projected increases under Option 3 on the cost-shared basis. However, further increases could only be met by reducing our total staffing budget elsewhere, which would lead to job insecurity and increased workloads, whether this would be achieved through job freezes or voluntary severance.”
Since last spring, universities, including Sussex, have consistently worked to reach a compromise with UCU to meet the aspirations to maintain USS’s benefits, to ensure that USS continues to be able to meet its commitments to pay our pensions, and to minimise the costs to individuals and employers in doing so.
The University understands how complex developments are in this space and wants to provide as much information as possible for staff to stay informed and aware of the implications. If you would like to find out more about who does what (e.g. UUK, USS, Pensions Regulator and UCU) and how decisions are made – you’ll find information here.
Over the coming weeks and during the start of the new term there will be many ways for all staff to share their views and seek information – and the University will continue to keep you updated.

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By: Sean Armstrong
Last updated: Friday, 9 August 2019