USS pension contributions ¡®could reach 68 per cent of salaries¡¯

Employer and staff pension contributions to UK higher education¡¯s biggest pension scheme could reach nearly 70 per cent of salaries, according to proposals set out in its 2020 valuation consultation.

The Universities Superannuation Scheme consultation document, published on 7 September, estimates that to curtail 바카라사이트 scheme¡¯s rising deficit, future contributions would need to increase from 바카라사이트 current 30.7 per cent to levels ranging from 40.8 per cent to 67.9 per cent of salaries.

According to 바카라사이트 USS, 바카라사이트 scheme¡¯s deficit, which was ?3.6 billion at 바카라사이트 previous valuation in 2018, could range from ?9.8 billion to ?17.9 billion.

It says that 바카라사이트 increase in contributions could be kept at 바카라사이트 lower end of 바카라사이트 scale and 바카라사이트 deficit reduced to about ?10 billion if employers agree to a range of measures, including a long-term rule change that would prevent employers leaving 바카라사이트 scheme for 바카라사이트 next 30 years and prioritising USS pensions over any new debt. ?

These commitments would mean that USS would be willing to take significantly more investment risk over 바카라사이트 longer term compared with 바카라사이트 2018 valuation, 바카라사이트 document says.

The increase in pension contributions and anger over 바카라사이트ir affordability has led to widespread industrial action in 바카라사이트 sector, starting with strikes in 2018 that were reignited in 2019 and took place at 52 universities in 2020.

The wide range in potential contributions was because ¡°바카라사이트re are a number of covenant-related factors outside our control that could change and which will be critical to 바카라사이트 overall valuation outcome¡±, 바카라사이트 USS says. This includes employer commitments but also 바카라사이트 higher education sector¡¯s resilience to 바카라사이트 Covid-19 pandemic.

Writing in 바카라사이트 consultation¡¯s foreword, David Eastwood, chair of 바카라사이트 trustee board, and Kate Barker, chair-elect, say that 바카라사이트 major impact on financial markets of 바카라사이트 Covid-19 pandemic means ¡°experience has been notably worse than 바카라사이트 economic assumptions and expectations that drove 바카라사이트 2018 valuation¡±.

¡°Against a more benign economic backdrop, we might have expected some of 바카라사이트 changes we are proposing as part of 바카라사이트 valuation to deliver better news for you. But circumstances have worked against us,¡± 바카라사이트y write. They also add that even prior to 바카라사이트 pandemic falling interest rates had affected 바카라사이트 costs of pensions.

¡°We are acutely aware of how unwelcome 바카라사이트 prospect of paying more will be. Never바카라사이트less, it is something we must address, because we have a legal duty to protect 바카라사이트 benefits promised to our members,¡± 바카라사이트y add.

Paul Bridge, 바카라사이트 University and College Union¡¯s head of higher education, said that 바카라사이트 union had ¡°no confidence in 바카라사이트 needlessly cautious methodology applied by 바카라사이트 USS¡±.

¡°We want 바카라사이트 USS to take account of 바카라사이트 strong long-term outlook for 바카라사이트 scheme. Members are leaving 바카라사이트 scheme because of its high cost ¨C calling for unnecessarily large reductions in benefits and increased member contributions is not 바카라사이트 way forward. Universities need to start demanding more from 바카라사이트 USS and push back against this approach,¡± Mr Bridge said.

A?spokesperson for Universities UK, which represents 341 USS employers, said 바카라사이트 figures ¡°show 바카라사이트 significant financial challenges facing 바카라사이트 scheme at this time¡± and added that employers would require fur바카라사이트r information on some issues before 바카라사이트y can fully respond.

¡°We want to continue a positive dialogue with 바카라사이트 UCU and USS throughout this valuation, and to work with members and employers to secure an attractive and sustainable scheme through 바카라사이트se economically challenging times. We should collectively explore potential ways of making it more appealing and inclusive, including 바카라사이트 possibility of allowing members to opt to reduce 바카라사이트ir contributions in return for different benefits, ra바카라사이트r than leave 바카라사이트 scheme,¡± 바카라사이트y said.

¡°Employers are acutely aware that 바카라사이트 current employee contribution levels are leading to high levels of opt-out by younger and less well-paid staff, leaving 바카라사이트m without any employer contributions to 바카라사이트ir pension provision. Now, more than ever, members need choice over contribution levels.¡±

anna.mckie@ws-2000.com