If you’re unsure about what’s proposed, would appreciate an illustration of how the changes would affect your benefits or just want to know where to find out more, then please refer to the short Q&A below – compiled in collaboration with Pensions Manager Alan Cunningham.
The consultation closes on 24 November.
1. Why is USS consulting with me?
The USS pension scheme undergoes an independent valuation every three years to assess how much money the scheme has – and whether it is enough to pay the benefits that have been promised to its members and their dependants.
It is expected that the 2023 valuation will determine that the scheme has a funding surplus of £7.4bn. This is welcome news – the proposals would see members’ contribution rates lowered and their benefits improved. As part of the valuation process, USS is checking that its members (and eligible members) are happy with their proposed package of changes.
2. Is it important for members to respond?
You are encouraged to ensure that you understand what is proposed as the benefits you build up after 1 April 2024 may change. Responding to the consultation will let USS know if you agree with their proposals, and this will help define the decisions that are made about your USS pension.
3. I’m not a member of USS; why was I invited to take part in the consultation?
You were invited to take part as an member of University who is eligible to join the scheme (all staff members on a salary of Grade 6 and above), as you may choose to join at any time.
4. Where can I find out more about the changes being consulted on?
The benefits you build up after 1 April 2024 may change. How they change depends on several different things, like your salary now and in the future, when you choose to retire and economic factors such as inflation. Please note that the benefits you have built to date are guaranteed.
5. Can you provide a quick illustration of what the changes mean?
If approved, it is likely the contributions for employees will reduce from 9.8% to 6.1%, so employees would pay less into their pension each month.
The accrual rate changing from 1/85 to 1/75 also means that benefits would improve. Here are a couple of examples:
Someone earning £35k a year:
The current accrual rate of 1/85 results in an annual pension accrual of £411.76 of gross pension and a tax-free lump sum of £1,235.29.
The proposed accrual rate of 1/75 would result in annual pension accrual of £466.67 of gross pension and a tax-free lump sum of £1,400.00.
Someone earning £60k a year:
The current accrual rate of 1/85 results in an annual pension accrual of £705.88 of gross pension and a tax-free lump sum of £2,117.65
The proposed accrual rate of 1/75 would result in annual pension accrual of £800.00 of gross pension and a tax-free lump sum of £2,400.00.
6. How can I respond to the consultation?
7. What happens next?
The consultation closes on 24 November. All responses submitted will be considered before any decision is made. The final position will be communicated to members, elected representatives and recognised trade unions as soon as possible after this date.
1 April 2024 is the earliest possible date that the currently proposed changes to the benefits would be implemented.
8. How can I ask a question about USS or stay updated about this consultation?
One more thing…
Please do ensure that you have registered for My USS.
Registration enables you to stay updated, track your benefits and any savings you’ve built up (please note that annual statements are no longer mailed out), view or change your target retirement age, and access the USS calculator, tools and helpful videos.