The second of these, which received significant press coverage, coincided with the announcement by USS that the Joint Negotiating Committee (JNC) had decided to accept a package of proposed rule changes, including a change to pension increases.
The timing of these announcements and the way they have been reported has, not unreasonably, caused some confusion for our members, particularly retired members. The following analysis of the changes will hopefully clarify matters:
1. The changes proposed by the JNC, which will be considered by the USS board of trustees on 22 July 2010, will not affect the rights of pensioners, or deferred pensioners, who left (or leave) prior to 1 April 2011. The changes in pension increase which are proposed will apply to active members, and then only to benefits in respect of service from 1 April 2011. For benefits in respect of service prior to 1 April 2011 pensions will continue to be increased as if they were official pensions (see note 3).
2. On 8 July 2010 Steve Webb, Pensions Minister, announced that from April 2011 statutory minimum increases in pensions and deferred pensions would change, to move in line with the Consumer Prices Index instead of the Retail Prices Index, and still subject to the existing ceiling (2.5%). These changes will apply to all schemes that pay the minimum increases although many, including USS, have provision in their rules to pay increases in excess of the statutory minimum.
3. The Chancellor, in the emergency budget in June 2010, announced that he intends to change the way that official pensions (those payable to members of the public service pension schemes) are increased from April 2011, to be in line with the Consumer Prices Index instead of the Retail Prices Index. There will continue to be no ceiling applicable to such increases. The USS rules state that pensions shall be increased as if they were official pensions. We are waiting for a further detailed announcement from government, therefore it is not possible to be absolutely definitive at this stage about the effect on USS. However, we do expect this change to apply to all USS pensions in payment, and to the indexation of deferred benefits. Increases awarded in the past will still apply. We will provide further information on this issue as soon as we are able to do so.