Benefits restored in full today for members of UK's largest pension fund

The restoration comes after UCU members took 69 days of strike action in defence of the scheme and two years after employers forced through cuts that meant guaranteed benefits were slashed by 35%.

The changes mean that as of today ^[1]:

• the accrual rate jumps from 1/85 to 1/75
• the defined benefit threshold increases to over £70k, up from £41k
• the hard inflation cap of 2.5% has been removed.

An additional one-off pension payment of around £900m has also been made to help make good the money members have lost since April 2022. The restoration and one-off payment mean an extra £16-£18bn will now go into pension pots ^[2].

In January, employee contribution rates also fell from 9.8% to 6.1%. That alongside the increase in benefits means a typical USS member will be around £150k- £200k better off ^[3].

Last month, university employer body, Universities UK, wrote to the government urging it to allow post-92 institutions to leave the Teacher's Pension Scheme (TPS). UCU responded by saying it would be "catastrophic" for the sector and that post-92 universities must continue to offer TPS to academic staff.

UCU general secretary Jo Grady said: 'After balloting, campaigning and standing on the picket line for 69 days, today's historic victory belongs to our members. They have done what many said was impossible and won their pension back.

'But just as we have won one battle, employers are now signalling they want to leave the industry standard pension scheme for schools, colleges and post-92 universities. Any institution that thinks it can rob workers of their retirement benefits needs to think again. We will defend TPS with exactly the same tenacity that saw us win back our USS pension benefits.

'This victory shows workers everywhere what we can achieve when we stand together. UCU will not stop until higher education employers properly value their staff.'

Notes 

[1] Full details of the restoration:

• reinstates the previous accrual rates of 1/75 and 3/75 (lump sum).  
• increases the defined benefit (DB) threshold from £41,000 annual salary back to where it would have been had changes not been implemented, at £70,296.
• removes the 2.5% pa cap on pension increases before and after retirement and replaces it with the soft-cap that was in place before April 2022.

[2] Using USS consultation modeller data from 2020 cuts, UCU estimates that a return to pre-2022 benefit arrangements with improvements in accrual rate, an increase to DB threshold, and reintroduction of the soft cap inflation protection will provide an additional £15 to 17bn in future member benefits, received at the point of retirement. The additional £900m one-off payment will therefore see a total increase of up to £18bn into pension pots. 

[3] UCU estimates that a member with the USS average salary of just over £48k, aged 43 and with 8 years' service and taking a CPI average at 3.0%, who claims their pension for 25 years, would benefit as follows: 

• total additional pension in retirement (when compared against cut 2022 rates) including:

  • restoration and augmentation - about £140k 
  • reduced Contributions - about £38k 
  • additional DC Pension - about £6k 
• total - £184k 

We would therefore estimate that average members will benefit from between £150-£200k in reduced contributions and future accruals in retirement.