UCL Pension Services
Consultation on the future
funding of USS
UCL Pension Services
Overview
• Why was a review of USS benefits and contributions required?
• The proposals for change
• What stays the same
• The consultation period
• Implementation of changes
• Questions
Why is a review required?
• Increasing longevity
• Salary increases impact on pension costs
• The unpredictability of inflation (notably the Retail Price
Index)
• Reduced investment returns and changes to statutory
funding regime
• The next actuarial valuation of USS is on 31 March 2011
Proposals
• A normal pension age of 65 will be introduced for
new entrants and for the future service of existing
members.
• Existing members over the age of 55 will be
exempt from the changes to the normal pension
age.
• The normal pension age will be linked to
increases to the state pension age.
Proposals (2)
• A flexible retirement scheme will be introduced
which will be available to members from age 55.
• The employee contribution rate for members of
the final salary section will increase to 7.5%.
• Pension increases (for pensions in payment) will
be inflation proofed in line with increases in the
Consumer Prices Index (CPI) subject to a 5% p.a.
inflationary cap.
Proposals (3)
• Pensions in deferment will be increased by CPI or 2.5%
p.a., whichever is the lower.
• A Career Average Revalued Earnings (CARE) benefits
structure will be implemented for new entrants.
• The contribution rate for members of the CARE section will
be 6.5%.
• Cost sharing will be introduced with cost increases shared
in the ratio 65:35 between employers and employees
respectively.
Proposals (4)
• A new right to retire on a reduced basis from age
55
• With effect from 01 April 2013, Members made
redundant from age 55 are entitled to a reduced
benefit only
What stays the same
• Death In Service Benefits
• Incapacity benefits
• Added Year Additional Voluntary Contribution
contracts
• Transfers-in
• Employer still contributes 16% of salaries
Consultation Period
• Begins 20 October 2010 and to last more than the
statutory 60 days (23 December 2010).
• Current and prospective members of USS will
receive consultation documentation
• Providing members with an opportunity to respond
to the proposed changes
Consultation Period(2)
• Dedicated USS Consultation website
• Trustees must consider the opinions raised by its
membership but do not have to act upon them
• Members and prospective members will receive
notification of the outcome of the Consultation
Consultation Period(2)
• Dedicated USS Consultation website
Consultation exercise – actions taken
• Meeting arranged with UCL unions in mid October
• Consultation documents sent to eligible
employees; 6600 – locations!!!
• UCL email address: ussconsultation@ucl.ac.uk
• USS eligible email sent Tuesday evening
• New contracts being sent have revised wording
and consultation document enclosed
• Front webpage of Pension Services changed
Consultation exercise – actions to be taken
• USS website will be updated with new Q&A’s as
consultation period progresses
• UCL will issue reminder email(s) before the end of
the consultation period; 22nd December 2010
• USS JNC will meet in late January to make
decision
• Feb –Mar 2011 decision conveyed to all eligible
employees
• April onwards – New scheme booklets
Consultation exercise – Considerations
• Adverts – New employees, not previously in USS, starting
after 31 March 2011 may not be entitled to final salary
defined benefits; CARE instead. Be aware that advert
should not state final salary pension scheme but instead
defined benefit pension scheme
• At interview (preferably) or at verbal offer stage, need to
identify whether employee has been in final salary section
of USS in previous six months to joining UCL to ensure
correct contributions deducted; 7.5% or 6.5%
Further information & Questions
• USS consultation website
www.ussconsultation.co.uk
• Pension Services Website
www.ucl.ac.uk/hr/pensions
• UCL email : ussconsultation@ucl.ac.uk
• Questions