Glossary of terms including the parties involved
Who is involved?
Universities UK (UUK)
UUK is the collective voice of 136 universities in England, Scotland, Wales and Northern Ireland. It is the nominated formal representative for over 350 employers participating in the USS pension scheme. Visit the UUK website
University and College Union (UCU)
UCU is a trade union that represents staff at UK universities. It is the nominated formal representative for USS scheme members. Visit the UCU website
Joint Negotiating Committee (JNC)
The JNC decides how increases in costs to the scheme should be met after the USS scheme has established the contribution rate required for the current level of benefits. The JNC’s options are to increase contributions or change future benefits or a combination of both. The JNC can also feed in its views on a number of other areas in the scheme, including the level of risk to take when calculating the contribution rate required.
The JNC is made up of five representatives from UCU, five representatives from UUK, and an independent chair.
The Pensions Regulator (TPR)
The Pensions Regulator is a public body, sponsored by the Department for Work and Pensions, set up to protect people’s savings in workplace pensions. One of the Regulator’s key priorities is to reduce the risk that pension schemes will require taxpayer support to meet their obligations.
The Universities Superannuation Scheme pension is used by 350 employers nationally and it is the second largest private pension scheme in the UK by fund size. At Imperial, all staff in the academic and research job family, and staff at levels 4 and above in the professional, technical and operational job families are eligible to join the scheme.
The legal obligation on the USS Trustee is to ensure that the pension fund is financially stable in accordance with rules set by the Pensions Regulator.
Joint Expert Panel (JEP)
The Joint Expert Panel (JEP) has been set up to examine the valuation of the Universities Superannuation Scheme (USS). The JEP is tasked with agreeing key principles to underpin the future approach of the University and College Union (UCU) and Universities UK (UUK) to the USS valuation.
As outlined in the panel’s terms of reference, a report from the JEP was published in September 2018. The second phase of work on the USS valuation has two parts; the first is concerned with the valuation process and governance, the second with the long-term sustainability of the scheme. Visit the JEP website
The collective financial strength of all the institutions that are part of a pension scheme. The stronger the financial strength, the less risk a scheme carries.
Deficit and deficit recovery contributions
A pension scheme has a deficit when the funds it possesses are less than the amount it expects to have to pay members now and into the future. Deficit recovery contributions are a portion of employer and employee contributions that are designed to close the deficit over a certain time period.
Defined Benefit and Defined Contribution
USS is currently a hybrid scheme: it has components of both a Defined Benefit and Defined Contribution model. Both provide the long-term reassurance that pensions are designed for but do so in different ways.
Defined Benefits (DB) provide a guaranteed output – you know exactly what you’ll get when you retire. The input (i.e. the price of being able to guarantee this) is not fixed. Employers and employees must predict what needs to be saved now in order to provide this guarantee, sometimes up to 60 years in advance. At a time when interest rates remain static, this prediction becomes difficult.
Defined Contributions (DC) provide a guaranteed input – you'll know exactly what you need to contribute. This is then invested and what you receive is dependent on how these investments perform. As such, the output you receive is changeable.In this way, DC schemes fundamentally change the notion of risk. Those who take the risk gain the benefits and, because there is no need to predict what that payout might be far into the future, the Pensions Regulator can generally permit lower contribution rates.