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Possible changes to USS

Details of possible changes to USS.

Key Points

  • The last triennial valuation as at 31 March 2011 showed that USS’s liabilities exceeded its assets by £2.9 billion and changes to benefits and contribution rates were made as a result. Since 2011 this deficit has increased significantly and has been very volatile. In June 2013 it was £7.9 billion
  • There are a number of reasons why the USS’s deficit has continued to increase since 2011 including falling bond yields, reduced optimism about investment returns and the increasing longevity of USS members.
  • The USS Trustees and the employers are in agreement that a revised funding and benefit plan must be put in place to deal with this much larger deficit and address the volatility in the USS funding level.
  • The USS Trustees are also concerned about the risk that the deficit could continue to grow and aim to reduce the risk of this happening in the future. They propose to do this by reducing the investment risk that they take with the USS’s assets.
  • If the USS Trustees’ proposals to reduce investment risk were to go ahead, this would increase the deficit from £7 billion to £13.1 billion calculated as at September 2013. This would push the contributions required from employers and employees to unaffordable levels. Therefore the USS Trustees have prompted a review of the benefits provided by USS in order to ensure that USS remains affordable.
  • Proposed changes to benefits are the subject of a consultation by Universities UK with employers during the period July-September 2014.
  • Following the completion of the employer consultation Universities UK will hold further discussions with the University and College Union (UCU) before submitting proposals for benefit changes to the USS Joint Negotiating Committee (JNC) later in the autumn. If it is determined that changes to benefits are required, a statutory consultation with affected employees will follow.

For full information on the possible changes to USS, including some FAQs please see the links below.

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