uss employer consultation 2018 · consultation proposal - summary • the employer match will be...

H E A LT H W E A LT H C A R E E R

U S S E M P L O Y E R C O N S U LTAT I O N 2 0 1 8

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C O N T E N T S

OVERVIEW OF BENEFITS1

CURRENT SITUATION2

CONSULTATION ON CONTRIBUTIONS3

WHAT HAPPENS NEXT?4


SECTION 1

OVERVIEW OF BENEFITS


Y O U R B E N E F I T S A S A U S S M E M B E R

Regular Income

Cash on Retirement

Flexibility of benefits

Top up savings

Ill-health benefits

Death benefits


C U R R E N T C O N T R I B U T I O N S

U S S … C U R R E N T C O N T R I B U T I O N S

8%for members

18%for employers = 26%


H O W U S S W O R K S

D E F I N E D

B E N E F I T

The USS Retirement Income Builder

Providing you with security

D E F I N E D

C O N T R I B U T I O N

The USS Investment Builder

Providing you with flexibility


B E N E F I T S I N U S S

Salary £000s

0 20

£55,550

40 60 80 100

USS Investment Builder (DC)

Automatic for salaries of £57,216.50* and

over with the option to make voluntary

contributions and choose the match

USS Retirement Income Builder (DB)

1/75th of annual salary up to a prescribed threshold,

with the option to make voluntary contributions to the

USS Investment Builder and choose ‘the match’

£57,216.50*

*2018/19:The threshold increases annually, broadly in line with the Consumer Price Index measure of inflation


U S S I N V E S T M E N T B U I L D E R – A B O V E T H R E S H O L D


+8% 12%

You contribute

of your salary above the

salary threshold

Your employer contributes

This is in addition to your benefits in the USS Retirement Income Builder

of your salary above the

salary threshold

INTO THE USS INVESTMENT BUILDER


U S S I N V E S T M E N T B U I L D E R – “ T H E M AT C H ”

+1% 1%

If you contribute

an additional

or more of your salary

Your employer also

contributes an additional

You can choose to pay more, but your employer will only match the first 1%

of your salary

INTO THE USS INVESTMENT BUILDER


SECTION 2

CURRENT SITUATION


T H E 2 0 1 7 U S S “ VA L U AT I O N ”

Are there

enough assets

to pay for all

the benefits

built up to

now?

How much

will it cost

for benefits

earned

in the

future?

FUTURE

PAST

REASSESSED EVERY 3 YEARS


T H E PA R T I E S I N V O LV E D

USS TRUSTEES

Ensures the promised

benefits built up are

paid to all

beneficiaries of USS

UNIVERSITIES

UK

(UUK)

Supports employers

UNIVERSITY

AND COLLEGE

UNION (UCU)

Supports the staff of

universities

THE PENSIONS

REGULATOR

Requires the scheme

checks it is properly

funded for the

protection of members

JOINT

NEGOTIATING

COMMITTEE

(JNC)

Approves

amendments to the

rules (made up of 5

UUK and 5 UCU

members with an

independent chair)

JNC


T H E 2 0 1 7 U S S VA L U AT I O N

Scheme

Actuary

Investment return assumption is at the upper end of the acceptable range for a strong

covenant

Covenant

advisorThe covenant is strong, but trustee should consider reducing risk

Employers UUK’s response indicated that trustee should take a more moderate approach to risk

The Pensions

Regulator

Investment return assumption is at the upper end of what is acceptable, if the covenant

is “strong”

UnionsUCU’s advisers concluded that the current contribution rate is a prudent contribution rate

given the current benefit design



Member

contributions up

to around 12%if no changes

18%for employers8%

for members

CURRENT CONTRIBUTIONS

Employer

contributions up

to around 25%if no changes


J N C D E C I S I O N O N 2 3 J A N U A R Y - R E V O K E D

JOINT

NEGOTIATING

COMMITTEE

(JNC)

Approves amendments to the rules (made up of 5

UUK and 5 UCU members with an

independent chair)

JNC £55,550

USS Investment Builder

(DC)

USS Retirement Income Builder

(DB)

Threshold

Salary £000s

0 20 40 60 80 100


A N E W PA R T Y I S I N V O LV E D …

JOINT EXPERT

PANEL

JEP

To examine the

2017 valuation

R e v i e w t h e va l u a t i o n c o m p o n e n t s

A g r e e f u t u r e j o i n t a p p r o a c h t o va l u a t i o n s

A s s e s s t h e 2 0 1 7 va l u a t i o n


T H E J E P R E P O R T

4 A R E A S O F A D J U S T M E N T T O T H E VA L U AT I O N

C o n s i s t e n c y w i t h 2 0 1 4 v a l u a t i o n

F a i r n e s s a n d e q u a l i t y b e t w e e n g e n e r a t i o n s

R e - e v a l u a t i o n o f e m p l o y e r r i s k

U p d a t e d m a r k e t c o n d i t i o n s

JOINT EXPERT

PANEL

JEP

To examine the

2017 valuation

“In addition, greater weight should be given to the unique features and

strengths of the higher education sector.”



USS TRUSTEES

Ensures the promised

benefits in USS are

paid as they fall due

THE PENSIONS

REGULATOR

Requires the scheme

checks it is properly

funded for the

protection of members

BUT… the valuation should have been

signed off on

30 June 2018

A new Schedule of Contributions needs

to be put in place

“Unless and until an alternative has been agreed, consulted upon, and

implemented, cost sharing remains the default process for addressing the

regulatory and legal obligations of the 2017 valuation”

https://www.uss.co.uk/how-uss-is-run/valuation/the-consultation-and-the-valuation-jep-timelines


S I G N I N G O F F T H E 2 0 1 7 U S S VA L U AT I O N

R E M I N D E R O F C U R R E N T C O N T R I B U T I O N S


8%for members

18%for employers = 26%


R E S U LT S O F 2 0 1 7 U S S VA L U AT I O N

C O N T R I B U T I O N S I F N O B E N E F I T C H A N G E S

… I F B E N E F I T S S TAY T H E S A M E ?

11.4%higher than

current

combined

contribution


R E S U LT S O F 2 0 1 7 U S S VA L U AT I O N

“ C O S T S H A R I N G R U L E ”

USS are proposing using the cost sharing process in

the rules to complete the 2017 valuation

Increase in contributions to be shared

35:65 between members and employers


SECTION 3

CONSULTATION ON

CONTRIBUTIONS


P R O P O S A L – T H E E M P L O Y E R M AT C H R E M O V E D

The employer match

to be removed from

1 April 2019

11.4%higher than

current

combined

contribution

10.6%higher than

current

combined

contribution


P R O P O S A L – I N C R E A S E I N C O N T R I B U T I O N S

C O S T S H A R I N G A P P R O A C H … I F B E N E F I T S S TAY

T H E S A M E ?

= 36.6%11.7%

for members

24.9%for employers

Phased contribution

rises from

1 April 2019



From 1 April 20198.8%

for members



From 1 October

2019

10.4%for members



From 1 April 202011.7%for members


P R O P O S A L – I N C R E A S E D C O N T R I B U T I O N S


P R O P O S A L – W H AT M E M B E R C O N T R I B U T I O N S F U N D


P R O P O S A L – W H AT E M P L O Y E R C O N T R I B U T I O N S F U N D

Benefits in the USS

Retirement Income Builder Deficit recovery

Contributions to the USS

Investment Builder Running costs

Investment manager

subsidies


C O N S U LTAT I O N P R O P O S A L - S U M M A R Y

• The employer match will be removed from

1 April 2019

• No change to the amounts going into the USS

Investment Builder above the salary threshold

• Phased contribution rises from 1 April 2019


R E S P O N D I N G T O T H E C O N S U LTAT I O N

Until 5pm on 2 November


R E S P O N D I N G T O T H E C O N S U LTAT I O N

Share your thoughts on:

• The match

• Cost-sharing

• Phased contribution increases

• Contributions to USS Investment Builder above salary threshold

• Alternative / additional proposals to address challenges from 2017 valuation


K E Y D AT E S F O R T H I S C O N S U LTAT I O N

Consultation start date

Consultation end date (responses must be received by 5:00pm)

Responses considered and the final changes decided on

Final position communicated

Intended date for first phased contribution increase


T I M E L I N E

2017 2018 2020

2017

31 March 2017

valuation date

2018/19

JNC decision

Sep/Oct 2018

Member consultation

on contributions

1 April 2019, 1October 2019

and 1 April 2020

Phased implementation of increased

contributions

2019

2019

New consultation?

Sep 2018

JEP report

STATUTORY REQUIREMENT TO FINALISE THE VALUATION

LONGER TERM SOLUTION TO RUN IN PARALLEL

uss employer consultation 2018 · consultation proposal - summary • the employer match will be...

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