Colleagues will be aware that the Universities Superannuation Scheme (USS) recently set out three options on contributions, as part of the 2018 valuation exercise, with employers being asked to confirm their preference for a particular option.
Following consultation, a majority of employers have agreed to the measures required by the USS Trustee to strengthen the employer covenant, and make a contribution rate of 30.7% of salary possible.
As a result, Universities UK (UUK) representatives put forward a proposal at a meeting of the Joint Negotiating Committee (JNC), which seeks to conclude the 2018 valuation with a contribution rate of 30.7%, and with the increased costs shared 35:65 between scheme members and employers.
This would result in a contribution rate of 9.6% for members, and 21.1% for employers, and would maintain the current level of benefits for scheme members. This option has previously been referred to as ‘Option 3’ and is now the formal path to concluding the valuation.
2017 valuation
There was no agreement on the 2017 valuation – USS concluded this by creating a 35.6% contribution backstop from April 2020 with interim increases for employers and staff in April 2019 and October 2019, but agreed to carry out a 2018 valuation to consider the Joint Expert Panel (JEP) recommendations.
The new 30.7% contribution solution would supersede the backstop increases from October 2019 and retain the current levels of benefits at a lower price for both members and employers than the backstop.
Next steps
The USS Trustee is expected to present a valuation report, in line with Option 3, to the JNC for consideration as an outcome to the 2018 valuation, at the JNC’s next meeting on 20 August.
Should the JNC not reach a decision on this date, the USS Trustee has indicated that there would be insufficient time to conclude the 2018 valuation ahead of the planned October 2019 increases from the 2017 valuation which would then come into effect (22.5% of salary for employers and 10.4% for members, with further increases scheduled from April 2020). These rates would remain effective until such time as the 2018 valuation is concluded.
The Joint Expert Panel is due to report in the autumn with recommendations to reform scheme governance and future valuations.
UCU have announced an industrial action ballot of their members to take place from 9 September until 30 October.
Further information
Further information is available on the USS website. We will continue to keep you updated.