UCL Pension Services
Update on the USS consultation
Jon Everard
Head of Payroll & Operations
UCL Pension Services
Update on USS
Consultation
Reminder of proposals – effective 1st April 2011
•
Normal pension age (NPA) of 65 for
new entrants and for the future
service of existing members existing members over age of 55
exempt from the changes
•
NPA will be linked to increases with
the state pension age
•
•
•
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
•
Deferred pensions increased by CPI
or 2.5% p.a., whichever is the lower.
•
A Career Average Revalued
Earnings (CARE) benefit scheme for
new entrants (though former
members of USS FS can rejoin FS if
rejoining within 6 months of previous
membership)
A new flexible retirement scheme
available to members from age 55
The employee contribution rate
increased to 7.5% for members of
the final salary section
Reminder of proposals – effective 1st April 2011
•
The contribution rate for members of
the CARE section will be 6.5%.
•
Cost sharing introduced with cost
increases shared in the ratio 65:35
between employers and employees
respectively
•
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
Consultation
• Detailed proposals document sent to active and prospective scheme
members 14-18 October 2010
• Statutory consultation period - 20 October 2010 to 23 December 2010
• Dedicated USS micro-website created and UCL email address
• Out of circa 6,000 potential respondents, 124 replied
• Trustees must consider the opinions raised by its membership but do
not have to act upon them
What happens next?
•
Trustees met on 20th January 2011 and asked interested parties and formally
the Joint Negotiating Committee (JNC) to consider modifications to some of
the proposals
•
Employer representatives happy with trustees proposed amendments
•
JNC meetings on 2nd February, 2nd, 10th & 17th March to consider proposed
modifications but employee representatives have not attended any of the
meetings, so no amendments agreed
•
JNC unable to confirm back to Trustees that amendments have JNC
agreement
•
As amendments cannot be agreed, all changes to the scheme planned for 1st
April 2011 will now not be implemented.
•
Trustees now considering how this development impacts on their statutory
duties of running the USS scheme
Modifications proposed by USS Trustees
Original proposal
Potential modification
Deferred pensions increased by
Consumer Prices Index (CPI) or
2.5% p.a., whichever is the lower
Pension increases to be equalised
with that received by pensions in
payment - CPI subject to a 5% p.a.
inflationary cap
A Career Average Revalued
Earnings (CARE) benefit scheme
for new entrants (though former
members of USS FS can rejoin FS
if rejoining within 6 months of
previous membership)
Rejoining period extended to upto
2.5 years since previous
membership of the USS FS scheme
Impact of proposed changes
• Adverts should refer to a ‘defined benefit scheme’ and should not
mention the words ‘final salary’ as appointee may only be entitled to
join USS CARE scheme
• Admin nightmare having to find out whether employee retains the right
to USS FS or must join USS CARE scheme
• New pay elements, reports and accounting issues
• Potential new flexible retirement policy to be designed
• From 2013 employees cannot take pension if made redundant until
age 55 and that pension will be actuarially reduced – reduced
incentive to leave early – potential run for the line
Questions