1. USS changes to be consulted on Sept 2010

2. Structure in USS Prior to USS there was a money purchase scheme FSSU for academics in the pre 92 universities 1976 USS was formed, between the employers and AUT, it was a final salary scheme The balance between the employers and the union was in the Joint Negotiating Committee within USS. There are 5 delegates from the employers and 5 delegates from the union with an independent chair who has a casting vote. On the Board the employers appoint 4 representatives and UCU appoints 3 and there are 5 independent trustees.

3. History JNC agreed to establish a working party the Joint Review Group to examine USS, and to see if it was possible to bring forward change if this was necessary. Initially it focused on the employers increase in contributions in October 20009 of 2% from the March 2008 valuation, but with the financial crisis it widen its brief. UCU had used its JNC team and the employers selected their representatives from the Employers Pension Forum (EPF ) USS provided evidence and support for the process

4. Joint Review Group The teams did examine USS scheme and the main areas of risk: Salaries Longevity Investment The group did look at statistics to see what was happening and what might be needed.

5. What was found The JRG timetable was to attempt to reach agreement by end of April 2010 In the process it was clear that salary increases in 2004 -07, were due to the introduction of the framework and where not a permanent feature. Longevity might led to an increase in 2011 by maximum of 1% Investment risk remained the largest affect

6. JRG – no agreement No agreement was possible at the end of the JRG JNC noted this and sets of proposals were tabled by both sides and taken at the next meeting in July. At the July meeting the Independent chair voted with the employers and these were sent to the Board The Board accepted these and is to formally consult via the employers.

7. Some meeting of minds That employees needed to pay more into the scheme in light of continuing increase in life expectancy That employees share risk – UCU future risk and employers everything Scheme changes – employers now and UCU wait the outcome of public sector pension scheme review as single salary in the sector Flexible retirement – UCU retain right to retire before 65 without loss, employers removal of the right. Normal pension age 65 years. UCU for new entrants and returners after 2 years break. Employers want exist members to have 65 on future service, with protection for 55 years only

8. No meeting of minds Contributions -UCU favoured tiered contributions to protect those on lower salaries under £25K and higher salaries to pay more as they lived longer. - Employers to remain with the flat rate. Pensioners -UCU wanted protection and RPI to be written into rules. -Employers support CBI and cap. CARE -UCU to reduce risk in salary but no loss of benefits. -Employers use as a cost cutting mechanism

9. Employers proposals Existing staff Contributions to rise to 7.50% Normal pension age of 65 years rising in line with state pension age, except if over 55 years on 1 st April 2011 (see tranches) Right to take unreduced pension if made redundant to end 31 st March 2013 Right to draw pension from aged 55 years reduced Flexible retirement Cost sharing 65:35 on pension scheme. No 1% extra contributions for joiners/returners over 60 Added Years AVC will remain at 15% on top of pension contributions

10. Protection Protection for members with contractual ages of 60 years of age, or to who employers give their consent to retire once they reach age 60 years, in the future, the members’ service up to 1 April 2011 will be not be reduced. With CPA of 60 or employer retires with the employers consent and they are under 60 years of age the service before April 2011 will be tied to 63.5 years

11. Deferred members after April 2011 Existing member who become deferred will have their pension increased up to max of 2.5% They will be able to draw unreduced at 65. They will be able to draw pension reduced from 55 If they return to work after 6 months, they will be placed into the CARE scheme

12. Pensioners From 1 st April 2011 the pension increase will be CPI not RPI and capped at 5% If there is a negative CPI there will be no reduction The move from RPI to CPI is via the existing rules and it will reduce the value of the pensions faster as it is 0.7% less than RPI by virtue of its mechanism as well as less by what it measures.

13. Tranches for active members Service up to 1 st April 2011 will be tied to contractual age, or age 60 years if exempted and the employer agrees to allow the retirement In all other cases service up to 1 st April 2011 will be deemed to have a pension age of 63.5 years. After 1 st April if not protected then moves to 65 years

14. Tranches for deferred members Service periodNormal Pension Age From 1 April 201165 + 1/04/1995-31/03/201163.5 (lower CPA) 17/05/1990-31/03/199560 Service 17/05/1990(men) 65 Women 60

15. What does this mean? Now 60 years of age with 35 years on £40K 40000/80 x 31 = £17,500 annual pension and lump sum £52,500 Future currently aged 40 who would want to retire at age 60 with 35 years service on £40k. £40K 15 years prior to April 2011 reduction of 3.5 years (to day this would enable you to take 84.8 male in USS) 40000/80 x 15 = 7500/100 x 84.8% = £6360 40K 13 years prior to 2024 when state pension is due to go to 66 years means reduction of 5 years at 79.3% male 40000/80 x 13 = 6500/100 x 79.3 =£5154.50 40k 7 years to 2031 reduction 6 years at 76 % male 40000/80 x 7 = £3500/100 x 76 = £2660 Total 6360 + 5154.5 + 2660 = £14174.5 annual pension and lump sum £42523.50 A loss of 20% annual pension

16. Flexible Retirement From age 55 years of age, member with employers agreement reduce their salary and working hours at least 20% can take up to 80% of their accrued pension. (can be drawn in 5% increments). Individual can use this on another occasion before finally retiring Employer to certify that the reduction was for longer than one calendar year. The remain will be added to by the continued employment and has a pension age of 65+ If the individual takes up any further employment or new employment it will not be eligible for USS Actuarial reduction will be applied in the usual way if they are paid before the normal pension age (60 if the CPA is that prior to 1 st April 2011.

17. continued If member dies after flexing their pension then the death in service lump sum will be calculated in the normal way and the lump sum they have already received deduced, the rest of the benefit will be the same. Variable-time employers will not be able to access this provision New CARE members will be able to use this provision in the same way

18. New entrants to USS From 1 st April 2011 new entrants will be placed into a Career Averaged Revalued Earnings CARE scheme. Existing members with breaks of more than 6 months will also be placed into this scheme and their earlier service tied to their final salary at the point of leaving then. Contributions will not be 7.5% but 6.5% Protection – employer can certify when member leaving that there is a reasonable expectation that they will return within 5 years and if they do to that employer or associate employers they will be able to remain in the final salary scheme.

19. CARE Benefits will be calculated on a career average basis, that is 1/80 th (or1.25%) of earning with a lump sum 3 x the pension The benefit accrual will be revalued by CPI up to 5%, where this is exceeded then ½% for every 1% increase up to maximum of 7.5% Lump sum can be increased by up to 25% of the pension pot based on actuarially neutral conversion factors

20. In- House AVC For CARE members they will be able to purchase additional annual pension expressed as a cash amount

21. CARE - transfers Members will be able to transfer pension rights in and it will purchase additional annual pension as a cash amount Public sector transfer club members the transferred credits must be linked to the member’s final salary not the career average revalued salary

22. Death benefits and Ill Health Will remain the same but using the career average revalued benefits rather final salary benefits. That is the USS will establish the amount of benefit earned in the final year of pensionable employment. In case of total incapacity the amount of benefit earned in that final year will be times by the service enhancement up to 65 years

23. CARE Is an inferior provision to the final salary scheme UCU’s actuary has worked out the pensions of final salary scheme of USS and CARE if introduced at the start of the scheme, the actual affect will vary from individuals to individuals depending on their career paths and break in services.

24. Details Care at 1/80 th of salary earned in any year This build to be tied to CPI It will be accrued in the following way up to CPI 5% will be fully credited After 5% for every 1% of CPI 0.5% will be credited – a maximum of 7.5%

25. Comparison- All Males- Revaluation on CPI Index Figures for the CPI index are not available before 1988. It is assumed, therefore, that the CPI would have been the same as the RPI LecturerAnnual PensionLump Sum USS (standard benefits) USS (after £16,921 of USS lump sum is converted to pension to provide the same lump sum as the CARE scheme) £19,395 £20,387 £58,186 £41,265 CARE£13,755£41,265 Loss of pension£6,632 (A reduction from 46.6% to 31.4% of in final pay) n/a Loss over retirement based on 18 years life expectancy £119,384n/a

26. Comparison Tables- All Males- Revaluation on CPI Index Figures for the CPI index are not available before 1988. It is assumed, therefore, that the CPI would have been the same as the RPI Senior LecturerAnnual PensionLump Sum USS (standard benefits) USS (after £22,901 of USS lump sum is converted to pension to provide the same lump sum as the CARE scheme) £23,864 £25,206 £71,591 £48,690 CARE£16,230£48,690 Loss of pension£8,976 ( A reduction from 47.7% to 30.7% of final pay) n/a Loss over retirement based on 18 years life expectancy £161,575n/a

27. Comparison- All Males- Revaluation on CPI Index Figures for the CPI index are not available before 1988. It is assumed, therefore, that the CPI would have been the same as the RPI Academic Related memberAnnual PensionLump Sum USS (standard benefits) USS (after £8,350 of USS lump sum is converted to pension to provide the same lump sum as the CARE scheme £12,036 £12,536 £36,109 £27,759 CARE£9,253£27,759 Loss of pension£3,253 ( A reduction from 28.6% to 21.1% of final pay n/a Loss over retirement based on 18 years life expectancy £58,908n/a

28. UCU UCU opposed these proposals, UCU believes that scheme change should be considered after it is clear what the public sector review brings given that there is single pay in the HE sector UCU believes that the cuts to members benefits are too severe and that the scheme does not need them The change to CPI from RPI in benefits the scheme LGPF believes this is 10% off pension liablities USS March 2010 was 91% funded this would mean the scheme would be fully funded. CARE could be used to reduce salary risks but not to cut benefits UCU believes that a single scheme is best in the sector and should not be worse than the other public sector schemes These cuts do not provide employers with savings in the short term – except in redundancy costs and this is not a cost to the scheme.

29. UCU members in May BALLOT RESULTS Q1. Do you support UCU's negotiating position with regard to the USS pension scheme? Yes 20,497 (96.62%) No 717 (3.38%) Q2. Do you REJECT the employers' current proposals for the USS pension scheme? Yes 20,359 (96.16%) No 815 (3.84%

30. UCU called for all members of USS to be able to vote in a referendum USS Board rejected this 6 th August UCU wrote to your employer asking them to conduct meaningful consultation on both sets of proposals and organise a ballot of all members on them. Notify USS, UUK, EPF and recognised trade union in their institutions If yes call for a re-opening of discussion in USS JNC If USS rejects this position then agree to alter contract to entitle members to pension benefits broadly comparable with the existing scheme Agree to ‘USS loss of Pension Benefits Compensation Scheme to pay compensation for loss of pay. They were asked to respond by 10 th Sept

31. Employers UCEA advice to reject the ballot and to circulate UCU proposals Also the ability of UCU to go into a trade dispute over compensation if the proposals go ahead. UCU legal advice is clear that UCU can go into trade dispute

32. Formal statutory consultation Due to start in Oct to end of year No information on format yet Expect USS to be neutral in their presentation UCU has established a referendum which is institution specific so the results can be feed back Asking to get members and non members to vote in it

33. Preparations Now is the time to have talked to all recognised trade unions on USS, seek to co- ordinate trade union responses to your employer Plan open meetings for all staff UCU is the employees representative and all members of USS need to hear what we have to say You will be asked to write to employer on formal consultation to arrange time table

34. Demands Ballot Consultation which involves UCU and members feed back to be published in the institution Obtain agreement that their response will be published in the institution Stress the need to change these proposals too much

35. Action Ensure branch lists are clean Build members confidence to fight for their pension Encourage members to join to have their say on USS changes and fight Target groups of staff most at risk of change Fixed term staff, researches with breaks likely Planning to move out of pre 92

36. Defend USS These proposals are not needed now Why not wait for 2010 valuation of USS and Public sector review UCU agrees that employees need to pay more for the longevity UCU agrees change is necessary, but it needs to reflect what the scheme needs An inferior scheme is not the way forward

37. Useful websites www.uss.co.uk there is information on what the board have decided www.uss.co.uk www.ucu.org.uk under pensions select Defend USS www.ucu.org.uk There is to be a dedicated website for the consultation details to follow and some employers have established a webpage in preparation for the consultation.