Value for money

We assess performance across three areas

Every penny we spend managing the scheme and its investments is drawn from the fund we are working hard to build to pay members’ benefits.

So, it is central to our role in managing the scheme that we keep tight control of costs.

Value for money is, however, more than just how much we spend in absolute terms.

We have to consider:

the benefits that are being delivered and the investments that will fund them,
the quality of services we provide to members and sponsoring employers; and
how we balance the costs of running the scheme with achieving good outcomes

...and we score well in each area

1. Cost Efficiency

We are significantly less expensive in total than our peer group*

CEM (a leading independent benchmarking organisation) compares us to a peer group. In the latest available comparison (2021), we were significantly less expensive in total than our peer group (£117m or 13bps). The substantial advantage in Investments more than offsets the higher Pension Administration/Scheme Governance cost.

*costs are presented on the CEM Benchmarking basis. Scheme Costs reported in the CFO section of the Annual Report and Accounts are £259m.

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2. Member & Employer Service

We scored 3rd highest for member service overall

CEM scored us 3rd highest overall compared to our peer pension administration group in the latest survey and very close to the top two (our score was 75 out of 100, above the peer median of 67).

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3. Investment & Solvency management

DB balanced scorecard rated 'Better than Good'

We introduced the DB investment balanced scorecard in 2022. This allows the trustee to holistically assess USSIM’s investment and advisory performance.

You can see how the Investment Committee assessed USSIM’s performance on our investment balanced scorecard page.

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1. Cost Efficiency

We are significantly less expensive in total than our peer group

We compare very favourably with peers. In the latest available comparison period (2021), our overall cost base was £117m p.a. (13 bps) lower than the combined peer benchmark, derived from separate investment management (Investments) and pension administration (Pensions) reports.

The scheme is significantly less expensive than peer schemes in relation to Investments. This is by far the largest element of total costs. CEM takes into account the investment strategy we have implemented.

We are somewhat more expensive than peers for costs included in CEM’s Pensions cost analysis. This covers support provided to members and employers coupled with scheme governance costs.

Our cost advantage in Investments far outweighs the impact of the higher spend on Pensions.

Around 87% of scheme costs relate to the Investment management of the scheme. The remaining 13% splits into the Pension delivery costs of processing and support services for employers and members (5%) and governance and other costs (8%).

Investment costs are benchmarked against a global peer group, whilst Pension costs are benchmarked against a UK peer group. CEM Benchmarking aims to provide like-for like comparisons where possible e.g. through its selection of the peer group and taking account of economies of scale in pension costs and adjusting for different asset-mixes.

The cost of managing our investment portfolio was £137m less than our peers would incur to manage a fund of our size

Our investment management costs in 2021 (the latest completed benchmarking year), which make up around 83% of total scheme costs, are significantly below the peer costs benchmark.

Costs of £218m in 2021 were £137m lower than the peer median (after scaling peer group costs to our fund size).

We have grown the proportion of assets managed internally over time and this gives us a significant cost advantage over peers.

Pension Processing & Support are broadly in line, Other costs (including Governance and Projects) are higher

Our total cost per member of £70 compares with a peer average of £36. We are broadly in line with our peers in processing and support services, (£25 per member versus £22 for the average of our peers), and our multi-employer, hybrid benefit and governance structure results in governance and other costs above our peer average (£45 per member versus £14 for the average of our peers).

These governance and other costs include scheme governance, communications, projects (including actuarial valuations), risk & compliance and technical/quality costs.

These differences drive an incremental £34 a year per member or £20m spend on pension costs compared to the average peer equivalent.

2. Member & Employer service

Our total member score is very close to the top of our peer group and we score highest for active members

CEM assess each of the peer group for their member service offering.

We score third highest overall compared to our peer group and very close to the top two (our score was 75 out of 100, above the peer median of 67).

We scored top for active members. The introduction of guidance calls and webinars, investment in digital functionality and greater use of member surveys to seek member feedback are examples that set us apart.

99.9% of USS retiring active member pension set‐ups were paid without an interruption in cashflow greater than one month vs a peer median of 65.0%.

99.9% of pension commencement lump sums were paid within one week of retirement for active members vs a peer median of 49.5%.

We score well for website use amongst active and pensioner members, with registration and use 17%-25% higher than peers.

We measure customer effort and levels of understanding, which only 45% of peers do.

The proportion of our calls that are abandoned in queue is 1% compared to a peer median of 4.5%.

We score just above the peer median for pensioners with a score of 80 vs. a peer median of 78. We score broadly in line for most assessment categories. However, some peers have greater digital functionality for pensioner members, for example allowing them to change their bank account information online and interact via secure email.

Service and Quality provided by Investment Builder (the DC element of the scheme) are compared to leading commercial Master Trusts

Redington, an independent pensions consultancy, undertake an external benchmarking of the Investment Builder DC element.

A broad range of features are compared with leading Master Trusts, including administration, investment, ESG considerations, governance, communication, and services available to members at retirement.

Redington’s view is, overall, we rate ahead of those other Master Trusts.

We score well in a global pensions transparency benchmark, with a rating of 78 compared with a UK average of 64

To ensure we inform stakeholders about how their scheme is managed, we provide updates including investment and cost performance via a range of published and face-to-face mechanisms. Top1000funds.com/CEM Benchmarking reports that we provide a greater level of transparency of disclosures compared with a peer group of 75 pension funds from 15 countries. We received a transparency rating of 78, compared with a UK average of 64 and a global average of 60. The analysis considered performance, governance, cost, responsible investing, and integrated reporting disclosures.