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Revaluation of USS Pension Scheme – Staff Briefing. April 2014 Richard Benson, Jo Brake-Oakes, John Garnham. Improving health worldwide www.lshtm.ac.uk. USS – overview of the scheme. USS is one of the largest pension schemes in the UK with 300,000 members and around £40bn of assets

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revaluation of uss pension scheme staff briefing

Revaluation of USS Pension Scheme – Staff Briefing

April 2014

Richard Benson, Jo Brake-Oakes, John Garnham

Improving health worldwide www.lshtm.ac.uk

slide2
USS – overview of the scheme
  • USS is one of the largest pension schemes in the UK with 300,000 members and around £40bn of assets
  • Established in 1974 as the national pension scheme for HE
  • Mutual or “last man standing” scheme with 390 employers – HE institutions, FE colleges, learned societies and others
  • USS is an independent company governed by a board of trustees, including:
  • 4 members appointed by Universities UK
  • 3 members appointed by UCU
  • 3-5 independents appointed by the board
  • Any proposals to change the rules of the scheme will be considered by the Joint Negotiating Committee of 11 members:
  • 5 appointed by Universities UK
  • 5 appointed by UCU
  • 1 independent, who acts as chair
slide3
USS – overview of the scheme
  • USS is a defined benefit scheme with two sections:

Career revalued benefits section

Open to members joining after Oct 2011

Final salary section

Open to existing members

Contributions

Contributions

Employer – pays 16% of salary

Individual – pays 6.35% of salary

Employer – pays 16% of salary

Individual – pays 7.5% of salary

Benefits

Benefits

Pension = average pensionable salary x 1/80 x pensionable service

Pension = final pensionable salary x 1/80 x pensionable service

+

+

Tax-free cash = 3 x pension

Tax-free cash = 3 x pension

slide4
USS – revaluation
  • Pensions’ legislation requires all defined benefit schemes to conduct an actuarial valuation every 3 years
  • The valuation will assess the present value of the assets and liabilities of USS, including:
  • Will contain a large number of assumptions of how these factors & other may change over time
  • Small changes in assumptions can have a big impact on the size of the deficit
  • USS trustees will need to agree a Financial Management Plan with the Pensions Regulator to eliminate the deficit over a period of years
  • The Regulator will be looking at:
  • are the assumptions reasonable?
  • are employers able & willing to take the steps needed to reduce the deficit?
  • sustainability, including a new objective “to minimise any adverse impact on the sustainable growth of an employer”.
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