USS publishes latest financial reports
- Estimated DB funding surplus increased over the last financial year by £0.9bn to £10.1bn
- Scheme’s assets outperform DB liability proxy by 14.1% p.a. over past five years
- Investment costs £440m lower than peer median over five years to the end of 2023
- Significant reduction in carbon emissions intensity of investments
- But serious concern about lack of real-world change in carbon emissions
Universities Superannuation Scheme has published its annual Report and Accounts, covering the financial year in which it celebrated its 50th anniversary, together with its latest Task Force on Climate-related Financial Disclosures report.
Dame Kate Barker, Chair of the USS Board, said: “Celebrating USS’s 50th anniversary has been a fantastic reminder of the scheme’s purpose – to work with Higher Education employers to build a secure financial future for our members and their families.
“The scheme’s funding is in a strong position at present, with the next actuarial valuation due in 2026. The defined benefit (DB) part of USS has an estimated £10bn surplus – indicating that our long-term investment strategy, broadly supported by employers who responded to a consultation last year, is doing the job it is designed to do.”
Read Dame Kate’s latest Views from USS piece, Investing for a purpose: the Retirement Income Builder.
Carol Young, Group Chief Executive, said: “Nine in ten employers rate their relationship with USS as good or very good, member trust is at its highest level on record, the number of people choosing to opt out of the scheme has fallen, and the scheme’s membership continues to grow.
“This follows member contributions reducing at the start of last year to 6.1% – one of the lowest member contribution rates in the 50-year history of the scheme, employer contributions reducing from 21.6% of payroll to 14.5%, and benefits being restored to pre-April 2022 levels.
“These are good outcomes for members and employers alike. After a decade of reporting deficits and requiring deficit recovery contributions on top of normal contributions, it is a welcome change for USS to be reporting an estimated surplus for a sustained period – and consistent with the Higher Education sector’s desire for stability expressed at the 2023 valuation.”
Task Force on Climate-related Financial Disclosures (TCFD)
TCFD is an industry-led group that helps companies and their investors understand their financial exposure to climate risk.
The scheme’s latest TCFD report shows that the emissions intensity of its portfolio declined by 51% between 2019 and 2024 – well ahead of its interim net zero target of a 25% decline by 2025 and in line with its ambition for its investments to be net zero by 2050, if not before.1
But this progress has not been matched by real-world emissions, which continue to rise. More needs to be done to slow down or reverse the rise in global temperatures.
Read more in our dedicated TCFD blog.
Simon Pilcher, Chief Executive of USS Investment Management (USSIM), said: “We believe that a world with higher temperatures will deliver poor financial outcomes – but, as our TCFD report clearly evidences, what we’re achieving at a portfolio level is not being replicated at a global, real-world level.
“There needs to be a significant shift in incentives – both financial and non-financial – to encourage a move towards low-carbon behaviour among business and consumers so that it becomes the easy thing for people and companies to do.”
Highlights of USS’s latest annual report
- Total assets under management2 at 31 March 2025 were £76.8bn (£73.3bn defined benefit; £3.5bn defined contribution).
- The value of the DB fund’s estimated surplus grew by £0.9bn in the year to £10.1bn (116% funded on a Technical Provisions basis, based on monitoring of the 2023 valuation), with the scheme’s assets outperforming its DB liability proxy by 14.1% per annum over the five years to 31 March 2025.
- The in-house investment team at USSIM continued to drive the significant cost advantage USS has over its peers. According to the latest independent analysis by CEM Benchmarking, the scheme’s annual investment management costs were the equivalent of £86m a year lower than the median global peer pension fund.3
- This is just one of the ways in which USS assesses its value for money proposition – but it is part of a long-term trend. Cumulatively, the scheme’s investment costs were independently assessed as £440m lower than the peer median over the five years up to, and including, 2023.
- USS’s Pensions Operations team retained the Customer Service Excellence accreditation and also secured Investors in People Gold status.
- The scheme’s anniversary was marked in various ways over the year, including a commemorative film, the reflections and perspectives of UCEA- and UCU-appointed directors, and members of the USS Board meeting one of the scheme’s longest standing active members.
- USS’s membership continues to grow and now stands at almost 577,000 people (234,000 active, 250,000 deferred, 93,000 retired).
- All members are in the DB part of USS, the Retirement Income Builder. Around 191,000 members also have savings in the Investment Builder, the DC part of USS.
- The number of people choosing to opt out of USS (c.10%) is at the lowest level on record.
1Our interim net zero target is to reduce our non-sovereign emissions in the DB part by 25% by 2025, and by 50% by 2030 (relative to a 2019 baseline).
2Assets under management is defined as total net investments for the DB and DC schemes and excludes non-investment liabilities and legacy AVC investments with Prudential Assurance Company Limited.
3Investment management costs (as a proportion of assets under management) after adjusting peers' costs to reflect our asset size and mix, covering calendar year 2023.