Employee consultation on changes to USS pensions
25 September 2023
Members will be aware that UCU has been engaged with Universities Superannuation Scheme (USS) and Universities UK (UUK) to restore pre-2022 benefits to your pensions following the cuts imposed from 1 April 2022.
In line with conference policy, we have been seeking USS to:
- reinstate the previous accrual rates of 1/75 and 3/75 (lump sum)
- increase the defined contribution (DC) threshold from £40,000 annual salary back to where it would have been had changes not be implemented at around £70,000 (for 2024 and depending on September 2023 CPI rate)
- remove the 2.5% pa cap on pension increases before and after retirement and replace with the soft-cap that was in place before April 2022.
As part of this process, UCU agreed to an employer consultation on these changes and this was launched on 19 July 2023. This consultation closed on 22 September 2023 and UUK will report back to USS by 29 September 2023.
An eight-week employee consultation has launched in the morning of Monday 25 September 2023 when UUK will engage all scheme members, including UCU members, on the proposed changes to be introduced on 1 April 2024. UCU is advising all members to support these changes. Please read the below before completing your consultation.
Reinstate accrual rates
This proposes to change the current accrual rates when calculating a scheme member's pension entitlement from using 1/85th of their annual salary to 1/75th of their annual salary. Also, from using 3/85th of their annual salary to 3/75th of their annual salary when calculating their lump sum.
Please support the changes the accrual rates.
Change to defined benefit/defined contribution threshold
In April 2022, USS reduced the threshold whereby a member has their benefits calculated within the defined benefit part of the USS hybrid scheme and the defined contribution part, reducing from around £66,000 annual salary to £40,000. This meant that any member who earned over £40,000 saw less money contributed to the defined benefit part of their pension and while they had more money in the defined contribution part, this will generally be worth less to them upon retirement.
UCU promotes defined benefit schemes and believes that members and the scheme are better off in a DB scheme rather than a DC scheme.
The proposed change under this consultation will see this threshold return to its pre-2022 level, adjusted for inflation. This will mean a new rate from 1 April 2024 of around £70,000 once the September inflation rate is confirmed. This will mean that more of member contributions will be allocated to the DB part of the pension scheme and members should be better off in retirement for this.
Please support changes to the threshold.
Restoring the soft cap
For increases in member pensions applied in April 2026 onwards to benefits built up from 1 April 2022, the following formula is proposed to be used:
| If the increase in official pensions is: | Then the proposed revaluation / increase applied to USS benefits is: |
| Less than 2.5% | The same increase |
| 2.5% or more | 2.5% |
However, this is less advantageous for members than the process in place before April 2022 changes and this consultation seeks to reinstate the previous process which is:
| If the increase in official pensions is: | Then the revaluation / increase applied to USS benefits is: |
| Less than 5% | The same increase |
| 5% | 5% |
| More than 5% but less than 15% | 5% plus one-half of the percentage increase above 5% |
| 15% or more | 10% |
Please support the changes and reinstate the soft-cap.
Your engagement is crucial
The union has been negotiating hard on your behalf, but it is vital that all members return their completed consultation papers as part of this consultation. We need members to be unequivocal in our demand to reinstate the terms our pensions were calculated under before the April 2022 changes. This will see a significant change to pension entitlement that members will benefit from for many years to come.
We have come this far because we have always understood that pensions is everyone's business, so please support the proposed changes. The progress we have made has been down to you--never giving up on your pension, never giving up on the future of the scheme, never giving up on each other. When it is restored, it will be a product of that dedication and commitment. We will also be issuing further communications to members shortly with suggested responses to the consultation and hope to provide an online webinar with a Q&A session shortly.
If you have any queries, please consult your employer in the first instance who is conducting the consultation. If after this you still have questions, please contact your branch representative or pensions officer or contact the pensions email here.
In solidarity
Jo Grady
UCU general secretary
- PrintPrint this page
- Share
