USS Employer Consultation Information session May 2015

USS Employer Consultation Information session May 2015

Background USS information video Recap of key proposed changes Example Questions 3 USS CONSULTATION Information session overview

4 Background

 January proposals agreed by JNC  9-13 Marchdelivery of consultation material to relevant staff  16 Marchstart of employer consultation  22 Mayconsultation ends  31 Mayemployers report to USS  June/JulyTrustee considers responses  Autumncommunication of agreed changes  April 2016earliest implementation date 5 BACKGROUND Timeline

Defined benefit amount paid in retirement is based on a formula linked to salary and years worked retirement income can be calculated in advance Defined contribution fund builds up depending on –what you pay in –the fund’s investment performance amount payable in retirement depends on fund value, therefore not certain in advance 6 BACKGROUND Terminology

7 USS information video

8 Recap of key proposed changes

Benefits built up before change are protected Final salary –pensionable salary & service at day before implementation used to calculate benefits Career revalued benefits section –built up benefits value as at day before implementation Built up value is revalued until retirement, in line with official pensions 9 KEY CHANGES Benefits built up before change

On portion of salary up to £55k –defined benefit –career revalued benefits basis –for every year you work you get 1/75 of salary as a pension (previously 1/80) 3/75 of salary as a lump sum (previously 3/80) –8% employee contribution (was 6.5% CRB, 7.5% FS) 10 KEY CHANGES Future scheme

On portion of salary over £55k –defined contribution –8% employee contribution (was 6.5% CRB, 7.5% FS) –12% employer contribution into fund 11 KEY CHANGES Future scheme

Additional defined contribution option –all members can contribute to a defined contribution fund regardless of salary level –up to 1% employee contribution will be matched by employer –employee can pay more if they want 12 KEY CHANGES Future scheme

Employer contribution to USS 18% (was 16%) –regardless of salary threshold –regardless of matching any optional employee contributions to defined contribution fund –minimum employer contribution of 18% will apply up to 31 March KEY CHANGES Future scheme

14 Example

45 years old In Final Salary scheme 20 years’ service built up by 31 March 2016 Planning to retire at 65 Current salary £15,000 Not expected to change grade before retirement 15 EXAMPLE Jeanie McTavish

Estimated changes to pension –current arrangement £7,110 a year –proposed arrangement £7,410 a year –£300 a year estimated INCREASE Estimated changes to lump sum –current arrangement £21,330 –proposed arrangement £22,220 a year –£900 estimated INCREASE 16 EXAMPLE Jeanie McTavish

– Interactive modeller – Detailed consultation material – Q&As Ask the University Pensions team: x USS CONSULTATION Where to find out more

 22 Mayconsultation ends  31 Mayemployers report to USS  June/JulyTrustee considers responses  Autumncommunication of agreed changes  April 2016earliest implementation date 18 BACKGROUND Timeline

19 Questions? USS CONSULTATION