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USS valuation latest
10 September 2021 Martin Higgs, Communications Officer
USS valuation: JNC decision to progress UUK proposal
The USS Joint Negotiating Committee (JNC) decided on 31 August 2021 to progress the proposal put forward by UUK for reform of USS benefits, writes Rebecca Dodd of Mercer’s Higher Education Group.
JNC decide to progress UUK proposals
By casting vote of the Chair, Judith Fish, the JNC voted to propose the reforms put forward by UUK
The benefit reforms and covenant enhancing measures would mean total contributions of 31.2%
There will need to be a 60 day “employer led” consultation with members (expected Autumn)
Changes would be from 1 April 2022
The October 2021 increases
USS have agreed that the October 2021 contribution rates (11% members and 23.7% employers) can be replaced with the reformed rates (9.8% members and 21.4% employers) subject to a two week consultation with UUK
USS have proposed a "dual-rate schedule of contributions" with backstop total contributions of 34.7% from April 2022 rising every 6 months up to 57% from October 2025 should the benefit reforms not happen
UCU proposal
UCU is discussing industrial action
UCU have announced an alternative proposal on their website but it wasn’t formally proposed to JNC
The proposal is similar to the UUK proposal in terms of a reduced salary threshold of £40,000 but with accrual of 80ths and member contributions of 8.1% (employer contributions of 24.9%)
UUK have advised employers to ask their UCU branch to ask UCU HQ to table any alternative formal proposal
What can you do?
Here are some things you might want to consider:
Council/Board/Exec Team guidance
Presentation to members pre-consultation explaining the current situation and what it all means
Presentations to members once the consultation has started explaining the proposals, the support materials available and how they can feedback into the consultation
A reminder of the UUK proposals
Proposed benefits
Accrual rate of 1/85ths (with 3 x lump sum)
Salary threshold of £40,000 (DC contributions stay at 20% in total above the threshold)
Indexationcapped at 2.5% p.a. (for benefits before and after retirement)
Covenant support measures
Debt monitoring with triggers for possible remedial action
Pari passu means equal security for USS on new secured debt with a threshold of 10% of assets Note: triggers and pari passu excludes those on “limited participation terms” like many post 92 universities
Rule change on employer exits with a 20 year rolling moratorium (no transition gap)
Contribution rates (costed by USS)
31.2% total contributions (currently 30.7%)
9.8% for members (currently 9.6%)
21.4% for employers (currently 21.1%)
Flexibility and lower cost pension options
UUK continuing discussions with UCU and USS
UUK hope to include the options as part of the consultation
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