USS latest: University responds to employer consultation

The University has submitted its response to a UUK employer consultation on the 2020 valuation. You can read the response on our website.

USS announced earlier this year that the cost of preserving the current level of benefits provided by the scheme had risen significantly – from 30.7% of salary to between 42% and 56% of salary. Further information and background on these figures, and an initial response from the University’s Pensions Working Group are available on the University’s website, along with other information about the scheme.

The University’s response to the consultation contained the following key points:

• The current combined contribution rate of 30.7% of salary should be enough to provide a high-quality, sustainable pension for the level of benefits currently provided by USS. The fact that it does not “is a significant failure of the regulatory approach to pension fund valuation.”
• Work should begin immediately on a redesigned scheme, based on a valuation date of March 2021, using conditional indexation (or another risk and reward sharing option), and for the new design to be implemented within the next 12-18 months. We have written previously to members about how this might work.
• The current USS benefit structure should be maintained in the meantime, with employers and members absorbing the additional rise in contributions (to 34.7% of salary) scheduled to come into force in October this year should the valuation not be resolved in time. The survey we ran last month (see below) revealed that 71 per cent of respondents were willing to do this.
• If the proposal put forward by UUK, which would see the current DB/DC hybrid structure and contribution levels maintained, but with a reduction in the value of benefits and inflation-proofing, turns out to be the only viable option, it should only be implemented for the minimum amount of time while an alternative and better value scheme were put in place.
• An additional, lower-cost and more portable section of the scheme should be introduced for those staff who have been priced out by the higher cost of the main section.

Unfortunately, employers have since heard from the USS Trustee that while there is interest from all parties in exploring conditional indexation, or an alternative scheme that better balances risk and reward, this is likely to take longer than 18 months, and is not therefore a viable option as part of this valuation.

USS has also said that UUK’s proposal could be implemented for 34.7% of salary, and possibly closer to the current contribution level of 30.7% if employers took action to strengthen the employer covenant.

UUK will now consider all employer responses to see if it can table a formal proposal in negotiations with UCU, the member representative. UUK documents can be found on its website. UCU may also wish to table a formal proposal. Its latest position on the 2020 valuation can be viewed on its website. Formal negotiations via USS’s Joint Negotiating Committee are scheduled to end in August this year but the statutory completion of the valuation will take longer, and it is likely that USS will increase contributions in October.

Survey data

Thank you to everyone who took the time to answer our recent survey on USS. The data you supplied was helpful in informing our response to UUK, particularly to question 11, which asked about lower-cost benefit structures.

The survey data showed that while most USS members at Cambridge would not like to move to a lower-cost benefit structure, a significant minority would appreciate the option, particularly among early career researchers and those who find the current contribution rate harder to afford. A summary of the survey findings can be viewed on the University’s website (Raven login required).

Next open meeting

The University will hold another USS open meeting for staff on Friday 25 June, 2:15-3:15pm via the Teams Live format. A link has been emailed to all current and eligible members via the USS bulletin. You can also submit a question in advance of the event via the Live Q&A panel (click on the icon with a question mark in a speech bubble if you can’t initially see this). A recording will be circulated afterwards for those unable to attend on the day. You can access the recording of the last open meeting online (Raven login required).

This message was sent to all Cambridge members of USS on 28 May 2021 via the USS bulletin