Proposed changes to future USS benefits

Employer (Universities UK) and member (University and College Union) representatives on our Joint Negotiating Committee (JNC) have, for several months, been discussing potential changes to the scheme’s future benefit structure in response to the latest triennial valuation.

The valuation reviews USS’s funding position and it has been a challenging process: very low prospective investment returns across all asset classes have increased the costs and associated risks of defined benefit plans.

In response to this, the Joint Negotiating Committee considered distinct benefit reform proposals tabled by both UCU and UUK. No joint proposal was tabled. Both were put to a vote and UUK’s proposals were carried by the JNC.

The proposed changes, detailed below, are subject to a statutory consultation by employers with all affected employees (active members and employees eligible to join). This is due to begin in March. They would come into effect no sooner than 1 April 2019 and would only apply to benefits built up from that point onwards by active members (people currently paying into the scheme).

Benefits already earned by both active and deferred members are protected by law and in the scheme rules. Benefits already being paid to retired members are not affected by this decision.

From 1 April 2019 (at the earliest):

  • The salary threshold (the salary up to which defined benefits currently build up) would reduce to zero;
  • All future benefits, until further review, would be built up in the USS Investment Builder (the defined contribution part of the scheme), except death in service and ill health retirement benefits – see below;
  • There would be no changes to the provision of death in service or ill health retirement benefits. These would remain based on full salary regardless of the salary threshold;
  • The employer contribution is proposed to remain at 18% of salary; as is the case now, this would cover deficit recovery contributions, the subsidy of investment management charges and scheme running costs, and their part of death and incapacity benefit contributions; 13.25% of their overall contribution would go into members’ USS Investment Builder funds;
  • Members would continue to contribute 8% of pay, but would have access to a lower cost option of contributing 4% while still receiving the full employer contribution into the USS Investment Builder of 13.25%;
  • Members’ 8% (or 4%) would include a contribution to partly finance their death in service and ill health retirement benefits.
  • The ‘match’ – the additional 1% employer contribution currently available when members contribute an additional 1% to the USS Investment Builder – would be discontinued.


Based on the prudent funding assumptions set by the USS trustee board in November, which were informed by a formal consultation with UUK, maintaining the current level of benefits would require a combined (employer and member) contribution rate of 37.4% of pay – an increase of more than 11% on the current rate (26%: 18% employer; 8% member). This included deficit recovery contributions of 6% (up from 2.1% of pay currently) to address a funding deficit estimated to be £7.5bn (89% funded).

The JNC’s decision results in an estimated funding deficit of £6.1 billion, which means the scheme is 91% funded.

Further reading

USS has also dedicated a section of its website to supporting members through the 2017 Valuation.

Published date: 23 January 2018

Last updated: about 3 years ago