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Revaluation of USS Pension Scheme – Staff Briefing

Revaluation of USS Pension Scheme – Staff Briefing. April 2014 Richard Benson, Jo Brake-Oakes, John Garnham. Improving health worldwide www.lshtm.ac.uk. USS – overview of the scheme. USS is one of the largest pension schemes in the UK with 300,000 members and around £40bn of assets

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Revaluation of USS Pension Scheme – Staff Briefing

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  1. Revaluation of USS Pension Scheme – Staff Briefing April 2014 Richard Benson, Jo Brake-Oakes, John Garnham Improving health worldwide www.lshtm.ac.uk

  2. USS – overview of the scheme • USS is one of the largest pension schemes in the UK with 300,000 members and around £40bn of assets • Established in 1974 as the national pension scheme for HE • Mutual or “last man standing” scheme with 390 employers – HE institutions, FE colleges, learned societies and others • USS is an independent company governed by a board of trustees, including: • 4 members appointed by Universities UK • 3 members appointed by UCU • 3-5 independents appointed by the board • Any proposals to change the rules of the scheme will be considered by the Joint Negotiating Committee of 11 members: • 5 appointed by Universities UK • 5 appointed by UCU • 1 independent, who acts as chair

  3. USS – overview of the scheme • USS is a defined benefit scheme with two sections: Career revalued benefits section Open to members joining after Oct 2011 Final salary section Open to existing members Contributions Contributions Employer – pays 16% of salary Individual – pays 6.35% of salary Employer – pays 16% of salary Individual – pays 7.5% of salary Benefits Benefits Pension = average pensionable salary x 1/80 x pensionable service Pension = final pensionable salary x 1/80 x pensionable service + + Tax-free cash = 3 x pension Tax-free cash = 3 x pension

  4. USS – revaluation • Pensions’ legislation requires all defined benefit schemes to conduct an actuarial valuation every 3 years • The valuation will assess the present value of the assets and liabilities of USS, including: • Will contain a large number of assumptions of how these factors & other may change over time • Small changes in assumptions can have a big impact on the size of the deficit • USS trustees will need to agree a Financial Management Plan with the Pensions Regulator to eliminate the deficit over a period of years • The Regulator will be looking at: • are the assumptions reasonable? • are employers able & willing to take the steps needed to reduce the deficit? • sustainability, including a new objective “to minimise any adverse impact on the sustainable growth of an employer”.

  5. USS engagement paper on scheme funding, January 2014

  6. Benefit Changes Options?

  7. USS Valuation timeline

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