Update sent by branch vice president Tim Goodall to all members by email on Friday 3 August
Dear UCU members,
You will have seen that the USS pension scheme has announced it will implement a ‘cost-sharing’ package, meaning that both employers and employees will see increased contributions to our USS pension scheme. These increases will be staggered, and begin in April 2019, when our contributions will rise from 8% of salary to 8.8%. That will then increase to 10.4% after six months, and up to 11.7% in April 2020. Employers will see a similar phasing of increases, up to 24.9% by 2020. The employers’ 1% match of voluntary additional contributions will come to an end.
The USS argues that these increases are necessary to make up the ‘deficit’ as calculated on certain disputed bases last year. USS will consult with scheme members on these changes in September.
The Joint Expert Panel was set up after the agreement of UCU members earlier this year, with a remit to look into that deficit. We do know that USS’s ‘accounting deficit’ has recently dropped from £17.5bn to £8.4bn, as a result of them applying different mortality and bond yield forecasts, demonstrating how pliable any pension ‘deficit’ can be, based on a number of variables.
Note that the cost-sharing adjustments that are to be implemented are based upon the November 2017 valuation of our pension ‘deficit’. Some reminders:
- The September valuation was rejected by a substantial minority of institutions (42%), leading to that more damaging November valuation and related proposal of shifting from defined benefits (we know what we will receive in retirement) to defined contribution (we only know what we pay in).
- It later transpired that this 42% consensus had been generated by double-counting institutional responses to UUK surveys, and some evidence of seeming collusion between some of them.
- USS themselves had calculated that institutions could afford increases based on that September valuation, and if we were able to return to it (seeing as the majority of institutions already supported it), we could avoid those heavy cost-sharing increases and maintain the status-quo more or less.
It remains to be seen if the Joint Expert Panel comes up with some agreement that might lead to an altered approach to cost-sharing.
Tim, on behalf of Leeds UCU Branch Committee