1. Update on USS Pension Fund Staff Presentations 26 th November 2014 1 December 2014 Will Spinks Registrar, Secretary and Chief Operating Officer

2. Declared Interests Member of USS Pension Fund Member of Joint Negotiating Committee Member of Formal Funding and Benefits Working Group Member of “Informal” Funding and Benefits Working Group

3. Objectives To share with colleagues information on the structure through which decisions on USS will be made To describe the current position To outline the expected future process To answer questions from colleagues In attendance: Karen Heaton, Director of Human Resources Heather Mawson, Head of Pensions

4. USS Trustee Board Made up of 4 UUK nominees, 3 UCU nominees and 5 independent members The Board directs the scheme and its administration to ensure that the promised benefits are paid Has a particular obligation to ensure USS is adequately funded In the context of the valuation, are particularly responsible for the valuation itself, the assumptions to be used, determining risk tolerance and setting contribution rates

5. Joint Negotiating Committee Made up of 5 UUK nominees, 5 UCU nominees and an independent chair Purpose includes approving amendments to rules and initiating amendments to the rules. Also has powers on the appointment and remuneration of independent directors In the context of the valuation, has a particular responsibility for changes to benefits Has sub-groups: formal (UUK, UCU, USS) and “informal” (UUK and UCU only)

6. The Pensions Regulator (TPR) Is the UK regulator of work-based pension schemes Where a recovery plan is needed, The Pensions Regulator assess recovery plans, proactively engage with schemes and investigate key risks Use a risk assessment framework to identify schemes to engage with before valuations take place USS is one of the schemes subject to early engagement

7. Summary USS TRUSTEE BOARD Valuation Process Valuation Assumptions Risk Tolerance Contribution Levels JOINT NEGOTIATING COMMITTEE (JNC) Changes to rules (benefits) THE PENSIONS REGULATOR Has regulatory powers that they can enforce

8. Questions? Any questions on governance structure ?

9. 2014 Valuation Effective as at 31 st March 2014 2011 valuation had a £2.9 billion deficit 2014 valuation likely to have a deficit between £ XX billion and £ YY billion Size of deficit dependent upon assumptions in “technical provisions” USS Trustee Board intend to decide upon technical provisions on 4 th December

10. Possible benefit changes Both UCU and UUK have submitted proposals for benefit changes to the JNC Both proposals include closure of the final salary section Both proposals include career revalued benefits (career average) for future accrual There are differences in approach Both parties have said they will negotiate

11. Proposal for Benefit Changes UUK ProposalUCU Proposal Closure of final salary section earned benefits indexed to CPI Closure of final salary section earned benefits linked to an index Future accrual career revalued benefits Accrual at 1/80 th plus 3 x salaryAccrual at 1/70 th plus 3 x salary Salary cap at £50k with 12% DC employer contribution above Salary capped at 85 th percentile with no provision above Opportunity for a further 1% from employer into DC benefit No further DC benefit Standard employee contribution 6.5% Standard employee contribution 9%

12. Questions? Any questions on valuation process or benefit changes ?

13. Forward process ( 1 ) USS Trustee Board meets on 4 th December to agree “technical provisions” This will lead to a determination of the size of the deficit JNC next meets on 15 th January Weekly meetings of Funding and Benefits Working Group before then Detailed negotiations are underway

14. Forward process ( 2 ) Once benefit changes are agreed, there will be a formal consultation process with USS members This process will last 60 days – likely to be February / March 2015 – modeller available. Detailed implementation plan will be prepared – likely to be April 2016 Pensions Regulator may offer comment.

15. Questions? Any remaining questions ?