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USS update – proposed benefit changes (8 September 2021)

This message covers changes to the national higher education pension scheme – USS, which is open to eligible staff at the University at FA5 or above.

There have been extensive discussions on the future of the scheme in light of concerning assessments of funding challenges facing USS following the March 2020 valuation.

The Joint Negotiating Committee (JNC) discussions have concluded with a decision via the casting vote, and a set of proposals have been presented to the USS Trustee Board with an agreed plan. These proposals have been approved by the Board.

There will now be a consultation with affected staff with the expectation of benefit changes for future service being implemented from 1 April 2022.

Proposed changes

Benefits you have built in USS to date are secure and unaffected. For future benefits, here is an overview of the key differences between the current scheme and the proposals:

Benefit description Current benefits Proposed benefits from 1 April 2022 (subject to consultation with staff)
Earnings threshold up to which defined benefits are provided £59,883.65 £40,000
Accrual rate up to the earnings threshold 1/75 1/85

DC credit on excess over the earnings threshold is unchanged at 20%, sourced 12% from the employer, 8% employee

20% 20%
Cap on inflation protection (CPI) Full protection for inflation up to 5% per annum, plus 50% of any excess over 5% per annum subject to an overall cap of 10% per annum. 2.5%

Currently, you are paying 9.6% of your salary in member contributions to your pension. Without these new proposals, USS were due to increase member contributions to 11% from 1 October 2021 and periodically again after that. Under the proposals, you will contribute 9.8% of your salary from 1 October 2021. Employers will pay 21.4%.

Key perspectives to review

For further information, UUK has put together a Q&A document with answers to some of the most frequently raised questions on the JNC process.

UCU and UUK have issued statements about the JNC decision. The Russell Group has also issued a response to the decision.

At Warwick, we recognise the value we all place on ‘guaranteed’ pension outcomes and we have worked throughout the national consultation to strive for a fair, and sustainable, scheme. Given the most recent valuation of USS pointed to the need for substantial increases to contributions, we know no change is not a viable option. The outcome reached by the JNC helps to ensure affordability, and ensure the scheme remains an attractive benefit for the sector.

Next steps

USS have written to members directly with further information and details of the consultation.

The consultation website is now available.