USS reforms needed to ensure sustainability of scheme - Russell Group

The Russell Group of Universities has urged the sector to "urgently" explore options for the Universities Superannuation Scheme (USS), arguing that reform is needed to put the pension scheme on a “stable, long-term footing”.

The comments were made amid Universities UK’s (UUK’s) ongoing consultation on proposed reforms to the scheme, with the group highlighting the initial proposals previously outlined by USS trustees as “unaffordable” for individuals, as well as employers.

It acknowledged, however, that changes are needed "now" to address the scheme's deficit, put it on a more stable long-term footing, and to address the fact that around one in five employees have chosen not to sign up to the scheme.

The group, which represents 24 universities, highlighted a number of principles it views as key to any future discussions around the scheme, including support for the principles of the proposals put forward by USS Employers, and particularly the proposal for an appropriate rolling moratorium on institutions leaving.

It agreed that the sector should seek to maintain a hybrid defined benefit/defined contribution scheme, and explore options for a lower threshold for defined benefits to keep contributions affordable for all, also agreeing that there should be a lower cost, more flexible alternative as part of the scheme.

In addition to this, the group expressed support of the principle of debt monitoring, clarifying however, that more information is needed on how these proposals would apply in practice and a guarantee that they are only applied to future debt.

It also argued that, as employers, the group must avoid further rises in contribution rates by agreeing a more sustainable solution for the sector, stating that both employers and individual members believe the current contribution rates should be sufficient to support an attractive pension for our employees.

The group backed UUK’s call for an independent governance review of USS, stating that it would like the scheme to work in a way that is more “accountable, transparent and collaborative” with the sector.

More broadly, it stressed that the sector must "urgently" explore if other options could be viable in the longer-term, beyond this valuation exercise, to ensure best value for staff from the significant contribution both they and employers make to the scheme.

Russel Group chair and University of Manchester president and vice-chancellor, Nancy Rothwell, commented: “Our people are our biggest asset and the key factor in the global success of our sector. It’s why we invest more in them than anything else and why we are determined to ensure they have a good pension and a secure future.

“Russell Group universities unanimously believe the current contribution rates are fair and affordable for all parties and should be sufficient to provide an attractive pension.

“We also believe reform is needed to put the scheme on a stable, long term footing and to ensure that it remains attractive and affordable for all of our colleagues.”

Individual members of the Russell Group are also expected to respond to the consultation individually, reflecting each institution's individual circumstances, although the outlined principles will be at the "heart of any response".

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