USS staff pension scheme changes
Updated 24 November 2014
USS Limited (the Trustee) is likely to make some significant changes to the Universities Superannuation Scheme (USS) in the 2015/16 academic year.
Following a lengthy discussion at its meeting on Friday 21 November 2014 the University Council has adopted a report from a Council Sub-Group established for the purposes of considering and reporting on the recent USS consultation. This report will be submitted to Universities UK who are preparing a consolidated response to USS on behalf of employers.
Read the report and appendices (pdf download)
USS membership is applicable to staff on grade 5 and above.
Why do you need to know this?
This information is important to you as the changes being described affect both the benefits from, and contributions paid into USS by members and employers. As more details become available, USS members may wish to review both their on-going financial position and future retirement provision in light of any agreed scheme changes.
Timeline of the discussion
These are emerging proposals and we await details of the proposed timeline for introducing the benefit and contribution changes. Subject to final confirmation, our initial thinking as to the possible timeline is given below. We will update the timeline as more information becomes available.
As one of 240+ employers participating in USS, we were asked by Universities UK to comment on the suggested changes to the benefits offered to USS members. We want to see the right balance between the benefits the scheme provides you and a sustainable level of contribution by USS members and employers to fund those benefits. We invited comments from all members of USS and from employees eligible to (re)join USS, to be submitted alongside the University response.
12 noon on Friday 19 September 2014: Feedback submitted by University staff before this time will be included in the University’s official response.
By 22 September 2014: Warwick's official feedback sent to Universities UK from employers, including feedback from 113 members of our staff 
. This was considered by the University Steering Committee and noted by the Senate.
28 October 2014: Meeting of the University Assembly with invitation extended to all those affected by USS changes. A motion was passed.
December 2014: University to provide Pensions information sessions (not financial advisory information – we are not allowed to provide such advice.)
January 2015 – April 2015: The Trustee will consult on final proposals with all scheme members. This will be arranged through the University (although we are only one of 240 participating employers) and will include a staff meeting which will encompass the formal Assembly, extended to all of those affected by USS changes.
October 2015: Final changes begin to take effect. As with the 2011 USS changes, it is possible that benefit changes may be phased over a period of time.
Background information
- Changes to USS: Myths, misconceptions and misunderstandings (9 October 2014)
- USS Employers’ proposals for reform – summary for members (9 October 2014)
- A Briefing on USS from the Employers Pensions Forum
- A Q&A on USS from the Employers Pensions Forum
- USS Career Revalued Benefits section
- A simple guide to pensions by Which
- A glossary of pensions-related terms from the Pensions Regulator
- Other useful pensions links including details of the USS Board
Why the USS needs to change
The Trustee's most recent valuations have shown that USS, like many other pension schemes, has a significant deficit. A number of factors have created this deficit, including rising life expectancy and the recent financial crisis. Whatever the final outcome of these discussions, it's clear that the scheme can't support the current level of pension benefits. Both the scheme Trustee and the Government's Pension Regulator will require USS to demonstrate that it has viable plans for the future.
The current benefits
Currently most members of USS are in a Final Salary scheme, which provides benefits related to earnings in the final years of contributory membership. Since 2011, members joining USS for the first time have joined the Career Revalued Benefits (CRB) section of USS.
Each year CRB members earn a 'block' of pension which is increased in value annually by reference to the Consumer Price Index (CPI).
The suggested changes
(amended by USS 9 October 2014)
The changes being proposed are:
- The final salary section will be closed. Benefits for those members will be calculated on their salary at the date of closure and will be revalued annually in line with CPI. This means that benefits will no longer be linked to final salary at retirement.
- Benefits earned after the date of change will be provided in the CRB section, based on members' pay up to a salary threshold (the threshold being considered is £50,000 though this is yet to be confirmed). This 'Threshold Salary' is likely to apply to all CRB members.
- Members with earnings above the maximum 'Threshold Salary' (and their employers) will be required to make payments into a "defined contribution (DC)" scheme in addition to their participation in and contributions to the CRB section.
- Contribution rates for employers are likely to increase, and in principle employees’ contribution rates could also increase, but these have not yet been confirmed.
- Members will also have the option to make an additional 1% contribution into the defined contribution scheme on all earnings Employers will be required to match these contributions.
- Contributions to the Defined Contribution scheme will not generate a guaranteed specific pension benefit; the benefit will instead be determined by the eventual value of this "pot" of contribution.
These proposals will be subject to further scrutiny and discussion, and final recommendations will not be made until later this calendar year.