USS publishes annual Report and Accounts

  • Sustained, strong investment returns over five years
  • Members offered access to private market assets in their DC funds
  • 83% of sponsoring employers rate relationship with USS as good/very good
  • Members positive about a range of USS services
  • Further falls in interest rates increase estimated DB deficit to £12.9 billion
  • Professor Sir David Eastwood to retire from Board, Dame Kate Barker appointed Chair-elect

Universities Superannuation Scheme has published its 2020 annual Report and Accounts, noting strong long-term investment returns but a sharp rise in its funding deficit due to the impact of Covid-19.

Investment returns for the scheme’s DB fund averaged 6.19% pa over the five years to 31 March 2020 (worth £17.4bn and 0.91% pa above benchmark). According to the latest independent analysis, USS saves £49 million a year compared to its peers by managing most of its investments in-house.

Investment returns for the scheme’s DB fund averaged 6.19% pa over the five years to 31 March 2020 (worth £17.4bn and 0.91% pa above benchmark). According to the latest independent analysis, USS saves £49 million a year compared to its peers by managing most of its investments in-house.

At 31 March 2020, total assets under management were £67.6bn (2019: £68.4bn). Its defined benefit (DB) fund stood at £66.5bn, while its defined contribution (DC) assets totalled £1.1bn.

Market conditions at the reporting date had a significant impact on the price of the scheme’s DB pension promises. Enduring low interest rates pushed its estimated funding deficit to £12.9bn at 31 March (2019: £5.7 billion).

Bill Galvin, USS Group Chief Executive, said: “At 31 March 2020, Coronavirus was sweeping across the world and financial markets were hugely uncertain about the potential outcome.

Our 2020 report outlines the position of the scheme against this challenging backdrop. Five-year investment performance was strong in absolute and relative terms, and we retained our cost advantage versus peers.

Even before Covid-19, historically low interest rates, increased life expectancy, greater regulation, and volatile financial markets had already made promises of a set retirement income for life more expensive.

“The depth of the economic shock brought about by the pandemic has highlighted the long-term challenges facing open DB pension schemes like USS; challenges that we intend to work with our stakeholders – Universities UK and University and College Union –to address through the ongoing 2020 valuation.”

Visit our 2020 valuation page for the latest updates.

During the year, USS made it possible for the 89,000 members contributing to its supplementary DC section, known as Investment Builder, to have access to the fund’s private market assets. These constitute the fastest-growing part of USS’s portfolio and include investments in critical UK infrastructure.

USS also announced the appointment of a new Chair of the Trustee Board. The Dame Katharine (Kate) Barker joined the Board in April as Chair-elect and will become Chair from September.

Professor Sir David Eastwood, who has been on the Trustee Board since September 2009 and Chair since April 2015, will retire from the board in August.

He said: “It has been an honour and a privilege to be involved with, and lead, such an important and successful organisation over the past decade.

“I know that everyone who works at USS cares deeply about its mission and about serving its beneficiaries diligently and to the very best of their abilities.

“Kate’s remarkable professional career and knowledge of the Higher Education sector make for an outstanding appointment.”

Dame Kate was Chief Economic Adviser at the CBI before becoming a member of the Bank of England’s Monetary Policy Committee from 2001 until May 2010.

She said: “It is a real privilege to be invited to take up this role. I am well aware of just how important this pension scheme is to university staff past and present.

“In addition, the performance of the scheme and its effective management is significant for much of the university sector.

Professor Sir David Eastwood, who has been on the Trustee Board since September 2009 and Chair since April 2015, will retire from the board in August.

“I look forward to working with the other trustees and indeed with all of the dedicated staff at USS.”


Highlights in 2019/20:

  • Over the five years to 31 March 2020, the DB fund has grown by £17 billion to £66.5bn.
  • Members offered access to private market assets in their DC funds.
  • USS Investment Management achieved five-year returns averaging 6.19% pa, outperforming its strategic benchmark by 0.91%.
  • By managing most of its investments in-house, USS saves £49 million a year compared to its peers.
  • USS’s membership grew in 2019/20 by almost 20,000, from 439,572 to 459,714 (204,753 active, 180,353 deferred, 74,608 retired).
  • All members of USS are part of the scheme’s DB section; around 89,000 members now hold supplementary DC assets with the scheme, which were worth £1.1bn at 31 March 2020 (2019: £0.8bn).