USS changes leave members £240,000 worse off - First Actuarial

The average Universities Superannuation Scheme (USS) member will be £240,000 worse off in retirement due to changes made to the scheme since 2011, according to analysis from First Actuarial.

It found that increased contributions, from 6.35 per cent in 2011 to 9.6 per cent from October 2019, the closure of the final salary element and the introduction of a salary cap for defined benefits would affect member costs and benefits.

However, in response to the findings, a Universities UK (UUK) spokesperson said that “winding the clock back to 2011” and “freezing the scheme in time” was not a credible measure to scheme members.

“Since 2011, the cost of providing defined benefit pensions has risen because people are living longer, and the economic environment has fundamentally changed,” they continued.

The University and College Union (UCU) will ballot its members on whether to proceed with strike action from 9 September over increases to member contributions, from 8.8 per cent to 9.6 per cent.

First Actuarial’s research found that member earning £40,792 with an annual salary growth of CPI plus 2 per cent would have lost £198,300 in benefits and pay and extra £40,900 in contributions compared to 2011’s rates.

Commenting on the research, UCU general secretary, Jo Grady, said: “This analysis details the substantial losses suffered by USS members in recent years. It is no wonder they have had enough and ballots for strike action open on Monday.

“The latest round of increased contributions backed by universities represents another pay cut for staff. We are concerned that those on lower pay may well decide they simply they cannot afford to pay for a pension anymore, putting the future of the scheme at risk.

“Universities have to recognise the anger and frustration that members feel about the recent changes, how the scheme has been valued and how it has been run. It is not good enough to come back time and again with proposals that force members to pay more for reduced benefits.”

UCU has been pursuing a policy of ‘no detriment’, and wants the employers to bear any additional costs, not the member.

However, this has not been offered by the universities and a ballot will go ahead.

A UUK spokesperson added: “Compared with 2011, employers are now paying more than £400m extra per annum into USS – having increased their contributions from 16 per cent to 21.1 per cent of salary from October 2019.

“This is far more than most other private pension schemes. This seems to be completely absent from the analysis.

“Crucially, members will keep their current benefits, which in monetary terms are more valuable than ever given the increased cost of providing pension promises.

“Two weeks ago UCU negotiators rejected an offer of lower member contributions; there is still time for the unions to consult their members on it.”

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