Changes to the USS pension scheme
Messages from the President and Provost
What has Imperial done so far?
Frequently Asked Questions
Universities Superannuation Scheme (USS) is one of the largest principal private pension schemes for universities and other higher education institutions in the UK.
At the last valuation date (31 March 2017), the USS Trustee confirmed that the USS scheme had a deficit which legally needed to be addressed.
Universities UK (UUK), who represent over 350 USS employers, has been negotiating with the University and College Union (UCU), who represent the scheme members, over changing the scheme since January 2017 given the funding challenges it faces.
The Joint Expert Panel (JEP) published their second report [pdf] on 13 December 2019. The JEP was looking in particular at the valuation methodology - the assumptions used to determine the financial state of the scheme and the contributions of employers and employees needed to sustain the scheme. The report makes a series of recommendations covering the governance of the Scheme, the valuation methodology and the way forward. Access a summary of the report
There have been five meetings in January between UCU, UUK and USS to discuss and agree the approach for progressing the JEP’s recommendations. Read the statement from the fifth meeting
In December, we wrote to the Pensions Regulator [pdf] calling on them to take a flexible and thoughtful approach to JEP2. They responded [pdf] that they are ‘…engaging with the Joint Expert Panel (JEP) and will consider their recommendations carefully…’. Their continued support for these new talks and the outcome of the consultation process will be crucial to successfully concluding the 2020 valuation and securing the long-term future of the scheme, and we will continue to remind them of their commitment.
Following the JEP report, UCU, UUK and USS have developed Statements of Purpose and Shared Valuation Principles [pdf] and will continue discussions around scheme governance issues at future talks.
On 10 February UUK asked all USS employers whether they continue to support UUK’s position of keeping employer contribution rates at 21.1%, or whether they would like UUK to make a new offer to UCU. Imperial’s response was as follows:
Imperial College strongly supports continuing negotiations on resolving the dispute on USS pensions, and is fully behind the tripartite talks based on the JEP2 report. In particular we favour further exploration of the valuation methodology for USS, and greater transparency. However, Imperial’s response to UUK’s request of 10 February for an indication of whether a further offer should now be made is no, as we are not convinced that this would be effective.
This view was also held by the majority of employers who responded.
On 19 February UCEA and UUK published a joint open letter to all staff at universities affected by strike action. The letter provides an update on the significant progress to address concerns of university employees on pay, working conditions and pensions. You can find the letter here and also on UUK and USS employers websites.
UUK have now responded to the JEP2 consultation. View their response
We sought the expertise of our own community to help us understand the implications of the first JEP report.
UUK consulted with USS employers on JEP2 and the College has now responded to the consultation: 20 02 Phase one consultation on Joint Expert Panel response (PDF).
This first phase of the consultation gathered the initial views of employers on JEP2 and how its recommendations might be applied to the 2020 valuation.
What's happening to my pension contributions?
Following the conclusion of the 2017 valuation, USS consulted with UUK and employers on the 2018 valuation.
Following this consultation USS are now proceeding with Option 3 for October 2019. Imperial supported this as the least worst option and the one that would lead to lower contributions than the 2017 valuation - which would otherwise have been in place until the Joint Expert Panel second report (JEP2) can be taken into consideration for the 2020 valuation.
Option 3 means total contributions of 30.7% into USS made up of 21.1% of salary for employers and 9.6% of salary for employees. You can find out more about what this will mean for your contributions by downloading our modeller [Excel].
How did this decision come about?
It follows a meeting of the Joint Negotiating Committee (JNC) on 22 August to consider UUK’s proposals under Option 3 to complete the valuation. The JNC agreed (by majority vote) on Option 3, which sets total contributions at 30.7% for the next two years. It also specifies that the change in contribution should be shared 65:35 between employers and members respectively (21.1% for employers, 9.6% for employees from October 2019).
The USS Trustee consulted with UUK on the proposed Recovery Plan for responding to the deficit assessed by it as at 31 March 2018, and on a revised Schedule of Contributions to confirm the contributions coming into effect from 1 October 2019. UUK consulted with employers – you can view our response [pdf]. UUK then formally responded to the USS Trustee.
The new briefing for Heads of Department on pensions and pay [pdf] has further background.