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This week has seen an important development in the USS pension valuation. 

Last week, we explained that the USS Joint Negotiating Committee (JNC) - comprising equal numbers of representatives from the UCU trade union, representing members, and Universities UK (UUK), representing employers – would be meeting this week to discuss the USS Trustee’s 2018 valuation report. 

The JNC’s discussions concluded yesterday (Thursday) afternoon. 

Following a casting vote by the independent chair, the JNC decided to adopt USS’s proposal for concluding the 2018 valuation, which was submitted in line with Option 3. UCU’s JNC representatives voted against the proposal. 

The decision will see USS pension benefits remain the same. Contributions will increase from 8.8 per cent to 9.6 per cent of salary for members, and from 19.5 per cent to 21.1 per cent for employers.  

It was important that the JNC made a decision this week in order to avoid larger hikes in contributions in October 2019 and April 2020.  

The valuation should now be able to be completed in time to replace the October 2019 increases scheduled from the 2017 valuation, which were significantly higher and would have been 22.5 per cent of salary for employers and 10.4 per cent of salary for members before increasing again in April 2020. 

Earlier this week, in an attempt to secure a compromise agreement with UCU, UUK’s JNC representatives offered to increase employer contributions by a further 0.5 per cent for two years in return for no industrial action over pensions, subject to consultation with employers and members. This would have resulted in an even lower member contribution rate of 9.1 per cent for two years, aligning exactly with the figures in the report by the Joint Expert Panel (JEP), which UCU and UUK supported. 

The compromise proposal was rejected by UCU, who want employers to cover all contribution increases. Employers have repeatedly stated that such a move would be unaffordable for the vast majority of institutions and would undoubtedly result in redundancy programmes. 

University employers view the agreement made yesterday as a pragmatic solution for the next two years that is acceptable to both the USS Trustee and, most importantly, the Pensions Regulator. It affords all parties time to consider the JEP’s next report ahead of the 2020 valuation. 

A second JEP report, which is expected to make recommendations for the long-term future of the scheme, is due to be published within the next few weeks. 

UUK has told UCU that employers remain open to further discussions to avoid the threatened ballot for industrial action, and to that end has requested that the JNC reconvene in September.