USS Faces Criticism for Increasing Contribution Price for 340 Universities UKEmployers
United Kingdom Europe Higher Education News by Erudera News Mar 05, 2021
Universities UK asserts that the USS Trustee pension's current prices are too expensive for 340 Universities employers to afford. This comment came after the USS published the new pension scheme and addressed the deficit’s growth, Erudera reports.
According to Universities UK, an advocate for 140 UK universities, numerous staff members on the lower scale of income have left the scheme due to the lack of financial stability of the new, more expensive plan presented.
“The very high prices for current benefits put forward by the USS Trustee are unaffordable for employers, risk pricing even more staff out of the scheme, and undervalue the collective and enduring financial strength of the participating employers,” a spokesperson for Universities UK claimed.
USS, which is one of the largest private pension schemes in the UK, provides its service primarily for university employers struggling to pay the fund contributions due to USS’s latest policies.
“The USS Trustee has now set out higher prices than it previously thought necessary, and it appears to be taking a more cautious approach than employers, and our actuaries advise is needed,” Universities UK spokesperson adds.
The spokesperson acknowledges the USS growing deficit but also points out the employers’ viewpoint.
“Employers understand that the USS has a sizeable deficit and that a high number of staff on lower grades opt-out because the contributions are too expensive for them. It is vital that contributions are affordable and sustainable for staff and employers alike and that reform is necessary,” the spokesperson states.
On the other hand, the USS pension scheme published on March 3, on Section 76.1 report, which represents employers and scheme members, details a significant price rise.
“The update sets out the increases in pension contributions that would be necessary to maintain the scheme’s existing benefits, in light of persistent low interest rates and reduced expectations of future investment returns,” USS asserts.
Based on this statement, USS further explains that the cost of the illustrative package of commitments, suggested by Universities UK, contributions for employers and members would need to rise to 49.6 percent of payroll.
Following the scenario, USS asserts a profound deficit recovery for contributions that need to be addressed since the fund’s deficit on March 31, 2020, was £14.9 billion to currently £17.9 billion. These findings reflect that expectations of future investment returns are now lower than assumed in the past.
Universities UK has actively addressed decisions that affect the university community, for instance, racial harassment noted by the advisory group chaired by David Richardson of the University of East Anglia in October 2019.
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