USS Update

(prepared for) Bath LA AGM 2012James Davenport

Conference decision

Priorities in the negotiations• de-risk USS through the introduction of an

acceptable CARE scheme for new entrants; • close the gap between the value of the CARE and

final salary sections by negotiating improvements to the CARE scheme which would secure broad comparability with TPS, including the removal of inflation caps; and

• protect the final salary pensions of existing members.

Conference also said“Conference resolves that any resumption of negotiations on USS with the employers should be followed by a series of briefings and consultation with branches and members on the comparative analysis of the USS and TPS schemes and should include discussion on options for changes including:

a. an exploration of the scope for funding any adjustments in benefits to address the gap between the scheme including the removal of the inflation caps and, in particular, the capacity of the schemes to absorb costs, without changes to contribution rates.

b. an exploration of the scope to design enhanced benefit sections of the USS CRB scheme to address the gap between USS and TPS with USS members being given the option to join the enhanced section or sections on the basis of:

(i) an increase contribution rate or (ii) the purchase of enhanced benefits on an individually costed

USS (new) versus TPS

• Broadly speaking, TPS members pay more (and tiered!) than USS/CARE, and get a better pension

• USS’s Actuaries have prepared a comparison, which shows the two to be balanced

• JHD disagrees with technical assumptions, and UCU is asking for a re-computation

• Once this happens, JHD will brief, and do the consultation Conference requested

USS Funding position in 2011

• UCU believed that the technical provisions could be set to be 100% funded

• USS set the technical provisions so scheme was 92% funded

• USS also set the future returns from the funds investment at gilts + 1.7% (return of 6.1% on investment)

• This required a recovery plan (which is under discussion with the Regulator)