Q1. Do you have any comments on the proposed change to end the link to final salary?
I am very dis-satisfied. I regard removing the link to final salary as a failure to honour the contract offer when I entered USS. On USS's own calculations, this amounts to a reduction of £4.8 billion in the pensions workers will receive in exchange for contributions they have already made (and will continue to make for the next twelve months) into the final salary scheme.
The radical changes being proposed to my pension are predicated on a deficit which has been calculated using a contested methodology. I note that challenges to the methodology have not only been made by UCU but also by a number of large employers. Adopting a more realistic approach to calculating the funding position, one which reflects the actual assets in which the scheme is invested, would considerably reduce the deficit and question the need for such radical proposals.
I consider that when I joined USS I was given a reasonable expectation that my pension would be based on my final salary. I consider that the proposed changes are inconsistent with those widely held expectations.
I understand that the employers and UCU have agreed to review the USS Board's excessively prudent approach to funding and I ask that this be given a high priority.
For the future, if benefits are to move to a career revalued benefits (CRB) design, I believe the scheme should be planning to improve both the accrual rate and the revaluation rate. As a minimum, USS should be matching the benefits of other public sector pension schemes (i.e. TPS in post-92 institutions) within the higher education sector.
I wish to see the full range of estimates of the deficit or surplus of the fund. I understand that these estimates have been calculated but not released to members.
Q2. Do you have any comments in relation to the proposed treatment of transfers in for final salary section members?
I know that people used to be told that USS was an excellent pension scheme to transfer into. The proposal to withdraw from the public sector transfer club may create recruitment issues. There may be also be a disincentive to apply for promotion if success would mean placement in an inferior USS scheme without the ability to transfer service from other schemes.
Q3. Do you have any comments in relation to the proposed treatment of Money Purchase and/or Added Years Additional Voluntary Contributions (AVCs) for final salary section members?
Added Years AVCs:
I do not agree that USS should be free to cancel the contract signed to purchase additional years' service in the final salary section. All of the literature about the AVCs I purchased indicated that the additional years would be added to my earned service and that it would be linked to my future final average salary. USS should honour the original commitment and enable me to continue to purchase additional years' service in line with the original contract.
It is not a reasonable alternative to offer me the ability to take out a new contract in an inferior (CRB) section of the scheme.
I note that USS considers that it can modify the benefits I will earn based on my future service in the scheme, but I do not accept that it can alter the added years' AVC. USS should honour my AVC service, in line with the original terms.
Money Purchase AVCs:
I understand that up to 31 March 2016 my fund enables me to purchase service in the final salary section of USS. I would expect the money-purchase fund value at 31 March 2016 to be clearly identified and increases accrued to that part of my money purchase fund should be used when calculating the additional service purchased in the final salary section.
Q4. Do you have any comments in relation to the proposed treatment of transfers in for current and prospective CRB section members?
I am concerned that there may be issues in relation to transfer from USS and non-USS institutions within the UK HE sector
Q5. Do you have any comments in relation to the proposed treatment of Money Purchase and/or Revalued Benefits Additional Voluntary Contributions (AVCs) for current and prospective CRB section members?
Contracts should be fully honoured. The closure of this facility reduces USS's attractiveness to potential members. I would expect the money-purchase fund value at 31 March 2016 to be clearly identified.
Q6. Do you have any comments on the proposed new career revalued benefits section of the scheme?
The proposal is a slight improvement, but it fails to match the other major HE scheme, the Teachers' Pension Scheme. USS should be planning to improve both the accrual rate and revaluation rate in the CRB section in the future.
Q7. Do you have any comments on the proposed level of the salary threshold or the proposed approach to the revaluation of the salary threshold?
I do not accept there should be a threshold. Defined benefits should be based on members' full salary. However, as a minimum, the salary threshold should be linked to the top of the nationally agreed pay spine. If this is not possible then the threshold should be revalued in line with RPI and if that is rejected by uncapped CPI. This requires urgent review.
Q8. Do you have any comments on the proposed application of the salary threshold for part-time employees?
I am concerned about the effect on part-time staff, who are predominantly women. There should be equal treatment in the scheme for part-time and full-time staff. As such, actual earnings should be used to determine the level of contributions payable, rather than full-time equivalent salary.
Q9. Do you have any comments about the proposed creation of a defined contribution section for employer and member contributions on salary above the salary threshold (£55,000 as at the implementation date)?
The change to DC is bad value for money. I am concerned about the extra costs of a DC scheme, and the much smaller expected pension.
The proposal is essentially for a hybrid scheme. The 2011 Independent Public Service Pensions Commission (Hutton Report) rejected hybrid schemes on grounds of increased complexity in terms of administration and ease of understanding, and the cash flow implications caused by the loss of contributions on earnings above the cap.
The current proposals are not transparent or simple. In fact, the lack of information on the defined contribution fund (for example, the investment options that will be available, or who will administer the scheme) undermines the consultation.
I would prefer all my earnings to be covered by the defined benefits section, and for the defined contribution section to be removed.
Q10. Ahead of any further engagement by the trustee about the defined contribution section, do you have any comments on the range of funds to be provided (including the default fund), the charges payable by members, or any other aspects of the defined contribution proposition
I do not accept the move to DC, but I do expect clear statements of costs, management fees and investment fees. I understand that the employer is to pay the administration charges and in the default fund the management costs. I believe that the employer should pay the same contribution to the management costs of all funds.
I want to know whether DC funds would be held individually or collectively. Governance arrangements should ensure that the selection of the funds and their operation is based on best value for members and low operating costs.
The selection funds should be able to be used for continuing investment after I retire, so that I continue to maintain the maximum flexibility of my fund and do not have to pay the costs of movement to other products.
Q11. Do you have any comments on the options the trustee should make available for members as to how they might use their defined contribution account at retirement or upon leaving the scheme?
I see no point in commenting here on the law regarding pensions introduced from 6 April 2015. USS should provide us with the option to keep any and all DC contributions invested in USS pension funds during retirement.
Q12. Other/General Comments
I understand that the UUK wished a delay in de-risking. Also, there are alternative valuations, such as that in the First Actuarial report, which means these radical proposals are not properly supported by evidence.