Presentation on theme: "UCL Pension Services Consultation on the future funding of USS UCL Pension Services."— Presentation transcript:
UCL Pension Services Consultation on the future funding of USS UCL Pension Services
Overview Why was a review of USS benefits and contributions required? The proposals for change What stays the same The consultation period Implementation of changes Questions
Why is a review required? Increasing longevity Salary increases impact on pension costs The unpredictability of inflation (notably the Retail Price Index) Reduced investment returns and changes to statutory funding regime The next actuarial valuation of USS is on 31 March 2011
Proposals A normal pension age of 65 will be introduced for new entrants and for the future service of existing members. Existing members over the age of 55 will be exempt from the changes to the normal pension age. The normal pension age will be linked to increases to the state pension age.
Proposals (2) A flexible retirement scheme will be introduced which will be available to members from age 55. The employee contribution rate for members of the final salary section will increase to 7.5%. Pension increases (for pensions in payment) will be inflation proofed in line with increases in the Consumer Prices Index (CPI) subject to a 5% p.a. inflationary cap.
Proposals (3) Pensions in deferment will be increased by CPI or 2.5% p.a., whichever is the lower. A Career Average Revalued Earnings (CARE) benefits structure will be implemented for new entrants. The contribution rate for members of the CARE section will be 6.5%. Cost sharing will be introduced with cost increases shared in the ratio 65:35 between employers and employees respectively.
Proposals (4) A new right to retire on a reduced basis from age 55 With effect from 01 April 2013, Members made redundant from age 55 are entitled to a reduced benefit only
What stays the same Death In Service Benefits Incapacity benefits Added Year Additional Voluntary Contribution contracts Transfers-in Employer still contributes 16% of salaries
Consultation Period Begins 20 October 2010 and to last more than the statutory 60 days (23 December 2010). Current and prospective members of USS will receive consultation documentation Providing members with an opportunity to respond to the proposed changes
Consultation Period(2) Dedicated USS Consultation website Trustees must consider the opinions raised by its membership but do not have to act upon them Members and prospective members will receive notification of the outcome of the Consultation
Consultation Period(2) Dedicated USS Consultation website
Consultation exercise – actions taken Meeting arranged with UCL unions in mid October Consultation documents sent to eligible employees; 6600 – locations!!! UCL email address: email@example.com@ucl.ac.uk USS eligible email sent Tuesday evening New contracts being sent have revised wording and consultation document enclosed Front webpage of Pension Services changed
Consultation exercise – actions to be taken USS website will be updated with new Q&A’s as consultation period progresses UCL will issue reminder email(s) before the end of the consultation period; 22 nd December 2010 USS JNC will meet in late January to make decision Feb –Mar 2011 decision conveyed to all eligible employees April onwards – New scheme booklets
Consultation exercise – Considerations Adverts – New employees, not previously in USS, starting after 31 March 2011 may not be entitled to final salary defined benefits; CARE instead. Be aware that advert should not state final salary pension scheme but instead defined benefit pension scheme At interview (preferably) or at verbal offer stage, need to identify whether employee has been in final salary section of USS in previous six months to joining UCL to ensure correct contributions deducted; 7.5% or 6.5%
Further information & Questions USS consultation website www.ussconsultation.co.uk www.ussconsultation.co.uk Pension Services Website www.ucl.ac.uk/hr/pensions UCL email : firstname.lastname@example.org Questions