There is a message from the university on the changes to USS on the staff portal of the University of Reading web site: http://www.reading.ac.uk/internal/staffportal/news/articles/spsn-598390.aspx . Here is OUR RESPONSE to the various points made by the university which are in our view not an accurate, but a biased representation of what’s going on.
1. No Formal Proposals. While the final proposed changes to USS have not yet been formally approved, the main features of these changes have been clear for some time.
2. Consultation. There is a legal obligation on the employers to consult the members, but when we were consulted on the previous changes in 2011, the result was a long running industrial dispute and threats of legal action against the five UCU members of the Joint Negotiating Committee. So much for consultation and negotiation.
3. Size of the Deficit. The calculation of the scheme deficit relies on forecasts of future asset returns, interest rates, longevity etc for the next forty or fifty years. Therefore there are a large number of possible estimates of the deficit, and USS itself produces five different deficit figures at each valuation using five different valuation methodologies. Therefore, any deficit figure is just an opinion.
4. Not Cost Reduction. The cost of providing the proposed pensions will be substantially lower than is currently the case because the proposed pensions are substantially inferior to our current pensions, and it is quite possible that the employers will be able to reduce their contribution rate.
5. An Excellent Scheme. First Actuarial have produced some illustrations of the effects of the proposed changes to USS. Someone who joined the USS final salary section at the age of 35 and retires at the age of 69 with a final salary of £70,000 will have a pension that is 45.3% lower than it would be under the existing scheme – a reduction of £18,551 per year. If this person had joined the current Teachers Pension Scheme (which covers the post-92 universities) their pension would have been £12,175 per year higher than their USS pension will be under the proposals.
6. Public Sector Scheme. USS is not a public sector pension scheme.