We have received the following member questions which our National UCU Pensions Official has answered:
1. Employer contributions are only guaranteed until March 2020 and they are proposing to extend this to March 2023. Once the University is no longer liable for the pensions, they can easily decrease their contributions in the future. Why is this not being extended indefinitely or at least for some very large amount of time like 50 years?
The University part of the USS which is a last man standing scheme which means all the liabilities of the scheme (past service accrued) are owned by all of the universities in the scheme and if an institutions failed then others would pick up the bill. Employer contributions in any scheme are reviewed each valuation i.e. every three years so a promise of 18% until 2023 is a long time normally it would be for 3 years. It wouldn’t be for a very long time because that would be assuming that the funding would require that and we can’t look that far ahead on future funding. Hopefully the economic conditions means they can reduce their contributions and therefore we can. It is a 65/35 distribution.
2.In the “A valuable DC” it says that 13.25% of the salary will go to the defined contribution pension. However, 18% is being contributed by the University on behalf of us. Where is the 4.75% going? If any of this is used to pay for someone else’s benefit that I am not entitled to, I think this is unacceptable. If we are truly switching to a defined contribution pension then it’s every man/woman for themselves.
They will always be liable for the past service by law so now a set amount of that will go to pay for the past service pot (accrued Defined Benefits), then there is a subsidy towards member charges, then remember the death in service and ill health will still be defined benefit thankfully and there is admin costs. It is a lot to come out of less than 5%. Remember under law the employer only has to pay 3% in total from 2019 when changes will happen.
3.Is there any way that another entity, not USS, can be chosen to manage the defined contribution portion of our pension? After all of the changes I do not trust them to correctly manage our money and I am worried that they will use money earmarked for our defined contribution pensions to pay off a defined benefit pension.
No this is in theory a temporary measure and in theory the defined benefit salary cap can move up again. It is up to the employers which schemes they go into. You can opt out and put your money elsewhere but the employer would not put any money in. The deficit and change are due to the way schemes are valued and market conditions not mismanagement.
Remember that post ’92 institutions are in the Teachers’ pension scheme which is very good. Employers think no-one will move across to these institutions but perhaps members will be tempted.