USS pension reform delayed
By: Alison Field
Last updated: Thursday, 31 March 2011

Proposed changes to a national pension scheme whose members include Sussex staff will not take effect from 1 April as had been planned.
A package of reforms to the Universities Superannuation Scheme (USS) was approved by a national joint negotiating committee (JNC) in July 2010, and then by the USS trustee board, subject to consultation.
The proposed changes continue to maintain USS as a final-salary scheme for current members, while managing the costs. For new members, a new Career Average Revalued Earnings (CARE) scheme would be introduced.
The key changes for current USS members would be the introduction of a normal pension age of 65 applied to their future service; the introduction of flexible retirement; and a contribution increase from 6.35% to 7.5%. Current members aged over 55 would be protected from the change in normal pension age.
As a result of consultation with USS members in late 2010, a number of beneficial amendments to the reforms have been proposed - extending the period under which staff could leave and rejoin the scheme, and significantly raising the 'inflationary cap' on benefits in payment.
The JNC, which is made up of employer representatives and trade union representatives, needs finally to ratify the revised changes before they can be implemented.
UCU has not attended three recent meetings of the JNC, took strike action in March and has asked employers to talk via the national arbitration service, ACAS.
In a statement from the USS trustee board following its meeting on 24 March, Sir Martin Harris, the USS chairman, urged UCU representatives to attend future JNC meetings to "avoid the consequences of continuing to frustrate the decision-making procedures".
The USS chief executive, Tom Merchant, said: "The normal business of USS has been disrupted by the failure of UCU representatives to attend the JNC on a number of occasions .... The board is taking steps to remedy the situation."
USS is separate from USPAS and the Sussex Group Stakeholder Scheme (SGSS), which are the local pension schemes for clerical, manual, ancillary and technical staff at Sussex.
The modified proposals (after consultation with members) for the new-look USS
- A normal pension age of 65 will be introduced for new entrants and for the future service of existing members.
- Existing members over age 55 will be exempt from the changes to the normal pension age.
- The normal pension age will be linked to increases to the state pension age.
- A flexible retirement scheme will be introduced, which will be available to members from age 55.
- The employee contribution rate for members of the final salary section will increase to 7.5%.
- Pensions in payment and CARE benefits will be inflation proofed in line with increases in the Consumer Prices Index (CPI), subject to a 10% inflationary cap.
- Pensions in deferment will be inflation proofed in line with increases in the Consumer Prices Index (CPI), subject to a 10% inflationary cap.
- A CARE benefits structure will be implemented for new entrants. The benefits will be based upon a 1/80th pension and 3/80th cash lump sum formula. (This produces a combined accrual rate of 1/64, which is comparable to similar schemes in the publicly funded sector.)
- The contribution rate for members of the CARE scheme will be 6.5%.
- Cost sharing will be introduced and any increase in the joint contribution rate - currently 23.50% (22.50% for the CARE section) will be shared 35%/65% by employees and employers respectively.