proposed merger of ouss with uss
DESCRIPTION
Proposed Merger of OUSS with USS. Miles Hedges Finance Director. Agenda. Reasons for the proposal Process Timescales Comparison of the two schemes What happens next? Your questions. Reasons for the Proposal. Benefits for staff Benefits for the University Cost to the University. - PowerPoint PPT PresentationTRANSCRIPT
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8 December 2003 1
Proposed Merger of OUSS with USS
Miles HedgesFinance Director
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Agenda
• Reasons for the proposal• Process• Timescales• Comparison of the two schemes• What happens next?• Your questions
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Reasons for the Proposal
• Benefits for staff• Benefits for the University• Cost to the University
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Benefits for Staff
• One scheme for everyone• Eliminates the promotion problem• Allows staff greater mobility between
universities• Provides security of a national pension
scheme
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Benefits to the University
• Greater stability of its future pension contributions
• Greater stability of its reported pension costs
• Remove administrative burden of dealing with more than one pension scheme
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Cost to the University
• The University is willing to pay a premium in order to achieve the benefits for staff and itself
• There is a limit to the amount of the premium that can be afforded
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Process
A long and complex process, involving:• The University Council – merger approved in principle
up to a given financial cost
• USS Trustees – the merger process and template has already been approved in principle
• OUSS Trustees – have to be satisfied that the merger is in the best interests of members
• OUSS Members – have to be satisfied that the merger is in their best interests
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Process
• Discuss proposals with trade unions• Put project team in place• Inform staff – including this meeting
• Negotiate terms with USS• Take legal advice – both University and OUSS Trustees
• Take actuarial adviceThis is a long and complex process
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Timescales
• Sep 2003 – Council decision in principle
• Oct 2003 – commenced discussions with trade unions
• Nov 2003 – project team formed; letter to all staff in OUSS
• Dec 2003 – open meeting for all staff; discussions with USS
• Jan 2004 – continued consultation with staff
• Mar 2004 – target date to agree principles of merger
• Jul 2004 – target date to complete merger if terms and financial conditions are right
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Comparison of the two schemes
USS• National scheme• Security based on HE
sector as a whole• Retirement age 65• Option to retire from
active service at 60
OUSS• Local scheme• Security depends on
a single employer• Retirement age 65• Option to retire from
60
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Comparison of the two schemes
USS• Pension = 1/80th of
salary for each year of service PLUS
• Lump sum of 3/80th of salary for each year of service
• Can convert lump sum into pension
OUSS• Pension = 1/60th of
salary for each year of service
• Can convert pension into lump sum up to Inland Revenue limit
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Comparison of the two schemesUSS• Dependent’s pension =
1/160th for each year of service
• Lump sum death in service benefit = 3 x salary
• Ill health pension = full service to normal retirement date
OUSS• Dependent’s pension =
1/120th for each year of service
• Lump sum death in service benefit = 2 x salary + refund of contrib’ns
• Ill health pension = service to date + 5 years
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Comparison of the two schemes
USS• Employee’s
contribution = 6.35% less tax relief
• Maximum pension increase = RPI increase
OUSS• Employee’s
contribution = 6.00% less tax relief
• Maximum pension increase = RPI up to a maximum of 5% in any one year
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UK INFLATION RATE: 1948 to 2003
-5
0
5
10
15
20
25
30
Jan-48 Jan-58 Jan-68 Jan-78 Jan-88 Jan-98
Date
%
UK INFLATION RATE
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Pension After 10 Years at Varying Inflation Rates
£0
£5,000
£10,000
£15,000
£20,000
£25,000
2.50% 5% 10%
Annual Inflation rate
Annu
al P
ensi
on
OUSS FemaleOUSS MaleUSS Both
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Pension After 10 Years at Varying Inflation Rates
£0£2,000£4,000£6,000£8,000
£10,000£12,000£14,000£16,000£18,000
2.50% 5% 10%
Annual Inflation Rate
Ann
ual P
ensi
on OUSS FemaleOUSS MaleUSS Both
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Pension After 10 Years at Varying Inflation Rates
£0£2,000£4,000£6,000£8,000
£10,000£12,000£14,000
1 2 3
Annual Inflation Rate
Ann
ual P
ensi
on
OUSS FemaleOUSS MaleUSS Both
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Spouse's Pension After 10 Years at Varying Inflation Rates
£0£1,000£2,000£3,000£4,000£5,000£6,000£7,000
1 2 3
Annual Inflation rate
Ann
ual P
ensi
on
OUSSUSS
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Comparison of the two schemes
• Merger is the last stage in a long process• Many changes have been made in the
past to bring benefits together – generally these involved increasing OUSS benefits but not always
• Remaining changes involve some measure of trade-off – in the same way as buying an insurance policy buys peace of mind if things go against you
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What happens next?
Communication plan:• Letter to you• Today’s meeting• Your questions and our responses• Regular progress reportsKey dates:• March – agree merger principle• August – start of your USS membership
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Your Questions
• To the panel now – Philip Marsh, Joe Devlin & Miles Hedges
• Information and questions and their responses will be posted on Personnel intranet
• Email to [email protected] • To your trade union representatives