Please find below a series of Q&As issued to support the consultation which ran from 16 March 2015 to 22 May 2015.
What is your question about?
Select a question below to see the answer
- Why aren’t the member contribution rates available? When will this be decided?
Member contribution rates are only subject to a statutory consultation if they need to increase, so they are not being consulted on.
It’s also anticipated that the combined member and employer contribution rate required to fund the current benefits provided by USS would reduce from the 31.4% currently required from members and employers (9.8% and 21.6% respectively) to 16.2%.
In light of the anticipated improved funding position and outlook, the JNC has approved to consult on a package of changes to improve benefits for members. The proposed changes on which you’re being consulted are anticipated to require a combined contribution rate from members and employers of 20.6%. These are provisional results at this stage, and the final contribution rates will be confirmed later in the 2023 valuation process following the trustee’s determination of the overall contribution rate. These decisions are expected by the end of December.
- How does inflation capping currently work?
It’s slightly different, depending upon when you started building your USS pension. To find out more, you can download our inflation cap briefing from December 2022.
- What will happen to benefits and contributions if economic conditions change, with lower inflation and interest rates – will we have to go through another set of scheme changes?
The scheme’s improved funding position provides a platform on which to build greater resilience and stability. A JNC working group is looking at stability.
The initial phase of discussions includes understanding features that can improve stability, then the working group will look more widely at stability, including potential options to provide greater resilience against the need for changes to contributions and/or benefits at future valuations.
- What do I do if my question isn’t answered here?
If, after you’ve explored this website, you have any questions about the consultation, speak to the pensions contact at your workplace or contact your UCU or other recognised representative.
- I’ve read that the contribution rate required to fund the JNC’s proposed benefit changes is anticipated to be lower than those paid today. I’m concerned that lowering contributions now will increase the likelihood of benefit changes in the future.
For defined benefit (DB) pension schemes, the contribution requirements can fluctuate to provide the defined level of benefits, which is assessed as part of the statutory valuation process. While the risk of a significant (and potentially unaffordable) contribution increase cannot be completely extinguished, there are tools available to help mitigate that risk.
The improvement we have seen in the funding position at this valuation provides an opportunity to improve the stability of contribution rates and benefits. For example, the Scheme is now in a position of surplus and retaining that surplus could help provide a buffer to cushion against any future increases in contributions.
There may also be the ability to vary the Scheme’s funding strategy, its investment strategy or indeed the benefit design to help manage any future volatility. We know stability is a key area of stakeholder focus and the JNC has established a working group to explore options which may help achieve greater stability for the scheme.
More information about stability and the tools available to help mitigate volatility is set out in section 10 of the trustee’s Technical Provisions document, which can be found on the ‘Supporting information’ section of this website.
- How do contributions to the defined contribution (DC) part of the scheme, the USS Investment Builder, work?
If your salary is above the salary threshold, which is currently set at £40,000 and is anticipated to rise to £70,308 from 1 April 2024, a contribution from you and your employer equal to 20% of your salary over the salary threshold will go into your DC (the USS Investment Builder) pot. It is proposed that the 20% is comprised of 6.1% of your salary over the threshold from your own contributions, and 13.9% of your salary over the threshold from your employer’s contributions. For further details on the JNC’s proposal please visit: 2023 valuation (uss.co.uk).
The JNC has not proposed any change to the overall 20% of salary over the salary threshold that goes into your DC (Investment Builder) pot.
In the DC part of the scheme (the USS Investment Builder) savings from you and your employer are invested based on your investment choices (or into a default option if you don’t make a choice). These savings, plus any investment returns, build up in your pot.
For further details on how contributions work please visit: Member factsheet - Contributions.