Trustee Board accepts proposals put forward by the Joint Negotiating Committee.
The USS trustee board met on 22 July 2010 and considered the package of proposed scheme changes recommended by the Joint Negotiating Committee (JNC)1 following its meeting on 7 July 2010.
The board noted that Sir Andrew Cubie, the independent chairman of the JNC, had used his casting vote in favour of the proposals put forward by the employers, considering them to be in the best, long-term interests of the scheme as a whole. Sir Martin Harris, chairman of the USS trustee board, thanked Sir Andrew for the way in which he had addressed the enormously difficult task of reviewing the scheme over the course of the last 18 months.
After careful consideration of the JNC’s recommendation, the trustee board agreed to implement the proposed scheme changes, subject to the completion of the statutory consultation, acknowledging Sir Andrew’s view that they are in the best, long-term interests of the scheme as a whole.
Following on from the Board’s acceptance of the recommendation from the JNC, it also confirmed that it would write in the near future to the scheme’s participating employers to advise them of the changes that are proposed to be implemented. Following receipt of these details, the employers will in due course inform affected employees about the proposed changes, and undertake a consultation through which members and their representatives can express their views about the proposals.
It is anticipated that the consultation will commence during September and will last for at least 60 days. The trustee company will work with the participating employers to enable full details of the proposed changes to be communicated to affected employees. The employers are expected to report the comments received during their consultation to the trustee board in December 2010 for its consideration before deciding whether to finalise the proposed changes or propose any modifications.
A summary of the proposed changes is set out below:
None of these changes affect the rights of pensioners, or deferred pensioners, who left (or leave) prior to 1 April 2011.
Please also read the separate news item explaining how a decision by government to change the way ‘official pensions’ are increased affects USS pension increases. Click here to view.
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Proposals |
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A |
A normal pension age of 65 will be introduced for new entrants and for the future service of existing members. |
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B |
Existing members over the age of 55 will be exempt from the changes to the normal pension age. |
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C |
The normal pension age will be linked to increases to the state pension age. |
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D |
A flexible retirement scheme will be introduced which will be available to members from age 55. |
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E |
The employee contribution rate for members of the final salary section will increase to 7.5%. |
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F |
Pension increases (for pensions in payment*) will be inflation proofed in line with increases in the Consumer Prices Index (CPI) subject to a 5% p.a. inflationary cap. |
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G |
Pensions in deferment* will be increased by CPI or 2.5% p.a., whichever is the lower. |
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H |
A Career Average Revalued Earnings (CARE) benefits structure will be implemented for new entrants. The benefits will be based upon a 1/80th pension and 3/80th cash lump sum formula. |
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I |
The contribution rate for members of the CARE section will be 6.5%. |
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J |
Cost sharing will be introduced with cost increases shared in the ratio 65:35 between employers and employees respectively. |
The proposed implementation date is 1 April 2011.
* These changes will only apply to benefits in respect of future service from 1 April 2011.
Please also read the separate news item explaining how a decision by government to change the way ‘official pensions’ are increased affects USS pension increases. Click here to view.
1 The Joint Negotiating Committee (JNC) is established under the rules of Universities Superannuation Scheme. The functions of the JNC are to approve amendments to the rules proposed by the trustee company, to initiate or consider alterations to the rules and to consider any alterations proposed by the advisory committee arising out of the operation of the rules. The chairman, currently Sir Andrew Cubie, has a second or casting vote in the case of an equality of votes.
The JNC consists of 11 persons of whom:
- five are appointed by Universities UK (individually a “UUK appointee”)
- five are appointed by the University and College Union (individually a “UCU appointee”)
- one independent member to act as chairman.
Media enquiries please contact:
Andrew Fleming at Penrose Financial
andrewf@penrose.co.uk / 07740 802 601
Background
The JRG, a sub-group of USS's JNC, was assembled in late 2008 to undertake a review of USS to determine what changes should be made to USS to ensure that it remains an attractive and affordable defined benefit pension scheme, and one that will continue to be an integral part of the remuneration package to help recruit and retain high quality staff for higher education on an ongoing, sustainable basis.
It comprised representatives from the Employers' Pension Forum (representing USS employers) and UCU (representing USS members), together with an independent chairman, Sir Andrew Cubie, who was jointly appointed by the employers and UCU.
The JRG agreed a timetable which specified that a decision on changes to USS would be reached by the end of April 2010. After a long period of detailed negotiation, the Joint Review Group (JRG) was unable to agree changes to USS. The JRG was then disbanded. At its meeting on 30 April 2010 the Joint Negotiating Committee (JNC) received formal proposals from both the employers and UCU, and these were considered in detail within the JNC mechanism through which a decision can be made.
Further Information can be found at:
http://www.employerspensionsforum.co.uk/
http://www.ucu.org.uk/index.cfm?articleid=1320