- What effects would the proposed changes to the USS pension have for early career academics?
Early career staff will be the most affected by the changes as they have less built up in the current scheme. They are also more likely to be on less secure contracts. Whatever anyone has built up in the current scheme up to April 2019 will be protected however, going forward under the current UUK proposals they will have no further benefits built up in defined benefit (annual pension linked to salary and service) but will be built up in defined contribution (what you pay is defined but outcome dependent on stock market) which will be a cash sum from which you would have to drawdown until it ran out or buy an annuity (pension) which is very expensive.
2. How do the proposed changes compare to what is happening to pension systems in the private sector, where investment funds are a common pension vehicle even for third sector employers?
Very like private sector pensions in that the build up is in defined contribution but the death in service and ill health will continue to be defined benefit.
3. Do we know in what kinds of investments our pensions will be held in, if the changes go ahead, and do employees have any control over these investments?
Thousands of members already build up a defined contribution pot in USS either as an extra and by taking the ‘match’ as a way of getting an extra one percent from employers or if they earn over £55,500 and all salary over that is pensioned as defined contribution. Currently there are 6 choices for members 2 lifestyles (one ethical) and one other ethical but this would expand.
4. I was wondering if it were possible for USS members to have their contributions paid into TPS. If not now, in the future?
This is an idea we would be happy to explore but it’s not under discussion at the moment.
5. Has the Union produced detailed data of the potential impact on members at different stages of their career i.e. 25, 35, mid-career and say two to three years before intended retiring date?
The First Actuarial report shows the impact on 12 hypothetical members at different career stages:
- What alternatives are UCU proposing?
Under discussion but will be governed by conference policy
- In the event that we do go over to a defined contribution pension, why should the university contribution be 18% to our 9%? (8%, it is only 9% with the match which will go)
That amount was based on what was needed to support our defined benefit pensions under the USS. (The employers envelope is 18% (until 2020) out of that is deficit recovery, charges, admin, money to keep the defined benefit paying out assuming the employee contributions are not going in; anything left will go into the individual DC pot and all the employee 8% will go into their individual DC pot. The individual will probably get an option to pay less in, which may be attractive to those who feel 8% is too high.
In 2011 the employers only wanted to pay 10% into a DC pot, the current offer is slightly more but the closed defined benefit section will eat money.)
Now that the money would no longer go to that, the amount they provide needs to be enough for us to have a sensible pension given expected returns. If this is above 27%, then they need to contribute more. Can such a calculation be done to determine what they would need to provide to be used in negotiations?
They don’t think they need to give you enough for a sensible pension they say they won’t contribute more, not can’t, won’t.
- In the event that we do go over to a defined contribution pension, can we get a non-negotiable guarantee that the universities will indefinitely contribute 18% (or whatever the final amount is) of our salaries into a defined contribution pension? I am concerned since currently the universities pay 18% to our 9% since that it what the USS needed to pay our pension. If the universities are no longer liable to support our pension, what is stopping them from slowly reducing their contribution to our pension?
They only ever promised 18% to 2020 and signaling they will reduce but as the Defined Benefit has no member contributions going in it will be very expensive.
- In the event that we do go over to a defined contribution pension, what fraction of the contribution will go towards supporting the defined benefit pensions? If this is any number above 0, why should we be responsible for supporting other people’s benefits? (Anyone in now will have benefits building up until 2019 not just other peoples.)
How can we be guaranteed that none of our money is used to support a defined benefit pension? Your money will go into your pot you can see it on the Investment Builder login. Yes the employer will have to pay a lot to keep the DB section, they have a legal duty to pay out pensions already built up.
- In the event that we do go over to a defined contribution pension, why should USS be the one to manage it? For whatever reasons, they have shown that they are unable to manage our pensions effectively. I don’t see why we can’t get another company to do it.
Good point one that has been made. However, because it’s so big it can buy investments cheaply and the employer will pay member charges for most options and admin. It is up to the employer not a member what scheme is on offer in a workplace. An employer will only pay in to the one scheme per group of employees so it’s that scheme or no scheme.
- In the event that we do go over to a defined contribution pension, what happens to our matching 1%? Will this carry on or be removed?
Whatever happens the match will be removed probably around April 2019. Make the most of it.
- What kind of pensions are the leaders of the UUK on?
UUK and USS staff like UCU staff are all in USS. The Vice Chancellors and such are usually earning too much to pay into a pension there is only so much you can pay in for a lifetime if not they are in USS.
- What happens if all junior members of the USS simply pull out?
They would love it. It would save employer contributions and not have to provide an alternative, if it is DC it can run as well with 3 people its all about individual pots.
- If the future accrual of the defined benefit portion of our pensions is set to zero, what does it mean to keep the death and incapability benefit? Do our partners or dependents somehow get our defined benefit pension if we die young? If so, how is that pension calculated?
In the current UUK proposals Death in Service and Incapacity will remain defined benefit in most DC schemes there would be a lump sum. How this would be calculated is yet to be discussed.
- In the news, I keep hearing that the issue with the USS all comes down to how future risk is assessed and that since universities are long standing institutions, there is no problem in the long run (e.g. https://www.timeshighereducation.com/blog/uss-pension-changes-would-be-disaster-universities-they-are-preventable). Are the universities being unreasonable about this and if so, how can this be remedied? Can we use a 3rd party to give a fair assessment of the risk to be used in negotiations?
We have tried and taken our Actuaries, First Actuarial into meetings. No success.
- How do the changes affect those who are already drawing a pension?
- How do the changes affect those who are on a flexible contract and drawing a fraction of their pension from USS?
No change on pension and same impact on pension building up as other members.
- Re the new pensions scheme, does this work like the Premium Bond system where one gets the capital (i.e. amount invested back) and then any gains on top on date of retirement or is the whole amount at risk and what you get back depends on how the market is doing on the day one retires?
The whole amount is at risk.