On 20 August there was a meeting of the USS Joint Negotiating Committee. The aim of that meeting was to vote on options for closing the 2018 valuation of USS. ‘Option 3’ passed with the casting vote of the independent chair.
A brief employer consultation on the level of contributions (to be split 65:35 between employers and members) and the deficit recovery plan will take place in time for implementation from 1 October 2019. As it stands, USS members and employers are set to pay increased contributions amounting to 30.7% of salary into the pension scheme from that date. Members’ contributions will rise from 8.8% to 9.6%, while employers will pay an additional 1.6%, bringing their total amount to 21.1%. By way of comparison, the rates payable from 1 October 2019 under the 2017 valuation would have been 10.4% for employees and 22.5% for employers. Benefits remain unchanged.
The UCU position, put forward at the JNC as a counter-proposal to Option 3, is that employers should cover all costs from the 2018 valuation – apart from an 8% member contribution. UCU is preparing for another round of strikes, with ballots on pensions and pay running concurrently from 9 September to 30 October. You can read Cambridge UCU’s statement on these developments here.
The University of Cambridge was one of the majority of employers that supported Option 3, believing it presented the best opportunity to progress quickly towards a long-term solution for USS. This included supporting tighter controls on borrowing by universities to protect the security of members’ benefits and a moratorium on employers leaving USS, to preserve the covenant strength.
Under Option 3, a new valuation of the scheme will now take place as at March 2020. The University is keen that this is informed by the second report of the independent Joint Expert Panel, due to be published this September, which is considering the USS valuation process and governance, as well as the long-term sustainability of the scheme. If the 2020 valuation does not result in agreement on a new contribution rate, the combined contribution rate will rise to 34.7% from 1 October 2021.
The University’s submission to the Joint Expert Panel’s most recent phase of work outlined how alternative approaches to USS’s valuation methodology could provide a more stable framework for long-term funding and benefit provision without steep rises in total contribution rates. The Joint Expert Panel will publish its report on future valuations and sustainability in September 2019.
The University and Cambridge UCU have run a number of recorded open meetings over the past year on USS developments. The next one, scheduled for early October, will discuss the implications of the 2018 valuation for members and employers and will provide an initial review of the Joint Expert Panel report. USS members will receive an invitation to this meeting shortly.
Further information from the University on USS can be found here. Information on USS from UCU is available here.