"Employers understand that the USS has a sizeable deficit and that a high number of staff on lower grades opt out because the contributions are too expensive for them. This may all sound a long way from the challenges faced by UK universities in 2021 but it isn’t. "However, employers and scheme members need a stronger and clearer justification from the USS Trustee for the very high pricing decisions. It is important that USS is designed so that people in early career can also access an affordable pension. “We are somewhat dismayed the challenge is so substantive…but people will need to come together and work on this,” he said. There are two rates for the Bereavement Support Payment. Employer and staff pension contributions to UK higher education’s biggest pension scheme are likely to rise to 49.6 per cent of salaries, according to the latest valuation. Subject to review, this is planned to increase to 11% from 1 October 2021. USS is one of the largest private pension schemes in the UK and is the principal scheme for academic and comparable staff in UK universities and other higher education and research institutions. The USS Trustee has a regulatory duty to file the 2020 valuation with The Pensions Regulator by 30 June 2021. Factors for late retirements and conversion of lump sum to pension will also be changing from October. If you like what you're reading online, why not take advantage of our subscription and get unlimited access to all of Times Higher Education's content? Jo Grady, general secretary of the UCU, said that “problems” with USS’ valuation methods and assumptions “have not been properly addressed despite widespread dissatisfaction among members and criticism from across the pensions industry and the higher education sector”. An open letter from university employers to staff impacted by the latest UCU pensions and pay disputes. 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It is entirely within the gift of the USS Trustee to determine that the package suggested by UUK secures a strong covenant rating as employers believe it should. Contributions are already set to grow in October 2021 to 34.7 per cent, to 11 per cent from employees and 23.7 per cent from employers. “USS and employers must do better. “It is important that USS is designed so that people in early career can also access an affordable pension. The USS has suggested that contributions will need to rise from 30.7% of payroll to up to 56.2% in light of low interest rates and reduced expectations of future investment returns. Universities UK says increases are unaffordable for employers and risk pricing even more staff out of scheme. Only 1 in 10 defined benefit schemes open to new members in 2006 are still open as of 2018, Since 2012, the average defined benefit total contribution rate has increased by 25%, The average USS pension payment in retirement is nearly three times the national average: £19,000 per annum as opposed to £7,000 per annum. Members who pay additional voluntary pension contributions worth 1% of salary or more currently benefit from … You'll get full access to our website, print and digital editions. Bill Galvin, chief executive of USS, said that this currently seemed the most likely scenario but said that the proposed commitments were “weak”. However, in a statement, UUK said that the “very high prices for current benefits put forward by the USS trustees are unaffordable for employers, risk pricing even more staff out of the scheme, and undervalue the collective and enduring financial strength of the participating employers”. Universities UK registered Charity No. Currently, contributions to the scheme are set at 9.6 per cent for members and 21.1 per cent for employers, a total of 30.7 per cent, although this was due to increase to 34.7 per cent on 1 October 2021. The scheme’s trustee board and the regulator will now “consider the appropriate response”, but one option under consideration is to bring forward an increase in contribution levels for staff and employers planned for October 2021, when contributions were set to grow to 11 per cent and 23.7 per cent, respectively. When the valuation will be finalised. Universities Superannuation Scheme (USS) is one of the largest principal private pension schemes for universities and other higher education institutions in the UK.. A valuation must be carried out at least every three years by law. The assumptions used by the USS Trustee in its valuation seem to seriously undervalue the collective and enduring financial strength of the university sector, which includes some of the world's leading universities. Someone should ask From 1 October 2021, the contribution rates will increase to 11% and 23.7% respectively. UUK added that “employers understand that the USS has a sizeable deficit and that a high number of staff on lower grades opt out because the contributions are too expensive for them”. The increases reflect the need to make a substantial amount of deficit recovery, as the fund’s deficit now ranges from £14.9 billion to £17.9 billion. The USS faces an astronomical deficit and, as Lowenstein shows, policymakers, managers and unions are often tempted to put tricky pension decisions off to another day. If you claim Bereavement Support Payment, you will get a first payment following up to 18 monthly payments. Employers have given their support for contributions of 30.7% (21.1% for employers and 9.6% for employees) to apply from October 2019, with a 2020 (rather than 2021) valuation. 2517018, Registered Office: Woburn House, 20 Tavistock Square, London WC1H 9HQ, Increased pension costs risk pricing university staff out of USS, Coronavirus (COVID-19) - information for universities. On 6 October 2020 the state pension age (SPA) will increase from 65 to 66 which means that the USS normal pension age (NPA) will also increase to 66. 25 February 2020. Corresponding employer contributions increased from 18% to 19.5%, then (from 1 October) to 21.1%, with a planned increase to 23.7% planned for 2021. The 2.5% rise was confirmed after the Office for National Statistics (ONS) revealed today that CPI inflation measured 0.5% in September. USS: pension contributions will need to rise sharply if existing benefits are to be maintained 03 March 2021 The Trustee of USS, the UK’s largest private pension fund, has today published an update report that explains the funding challenges facing the scheme. After a decade of pay and conditions being degraded, many precarious and low-paid higher education workers can no longer afford to be USS members. Just register and complete your career summary. Should no agreement on the contribution rate be implemented before October 2021, however, the contribution rate would rise to 34.7%. If this proposal is implemented, it would increase total contribution rates from 30.7% of payroll (i.e. If the deficit recovery contributions proposed by the USS Trustee under the 'as is' scenario were paid from current contribution rates, the amount left for future pensions would be at a similar level to a minimum auto-enrolment scheme. The joint negotiating committee, which includes representatives from UUK and UCU, will now be asked to decide on any changes to contribution rates or benefits that may be necessary. Without this justification, employers and scheme members will be concerned that the scheme is facing an unnecessary level of reform. If UUK increased its commitments, including at least a 12-year moratorium on employer exits, the USS trustee said the overall contribution rate would need to be 42.1 per cent. This means it is vital that contributions to the scheme are affordable and sustainable for staff and employers alike and that reform is necessary,” UUK said. employer + employer contributions) currently to … Updated with 'Public service pensions increase: 2020'. Universities UK, which represents 340 USS employers, has indicated a range of commitments to USS, including a six-year moratorium on employer exits from the scheme. CPI Announced as 0.5% - Forces Pension Society This is the figure that will be used to increase all Armed Forces pensions in payment from April 2021. Cambridge University VC and other leaders have written openly to raise serious concerns and call for re-engagement. The latest valuation report from the Universities Superannuation Scheme, published on 3 March, concludes that without further financial commitments from employers to strengthen the scheme’s covenant, overall contribution could even rise to 56.2 per cent. Deferred Pension Increase Modeller Your details Calculation Date: 02/03/2021 Date of birth: Date of leaving: Section of USS: Final Salary Benefits Pension at leaving: (accrued prior to 1 October 2011) £ Pension at leaving: (accrued from 1 October 2011 to 1 October 2020) £ Pension at leaving: (accrued from 1 October 2020) £ This proposal has now been shelved and a new contribution rate proposed from 1 October this year, with staff paying 9.6% of salary and employers contributing 21.1%. Mr Galvin said that the USS recognised the difficulty in increasing contributions but said the fall in interest rates since 2018 and the recent financial impact of the Covid-19 pandemic meant they were necessary.
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