1. Universities Superannuation Fund A UK industry model Rotman ICPM / Netspar / Maastricht University Discussion Forum – October 2007

2. USS history and background Started in 1975, a DB scheme for academics Predecessor was the Federated Superannuation Scheme for Universities (FSSU) FSSU had shortcomings Pressure grew for a DB solution, and parity with the Teachers’ Pension Scheme

3. USS overview 2 nd largest pension scheme in the UK with assets of £30bn and membership of 240,000 Multi-employer scheme mutually funded by more than 330 universities Index-linked final salary with 50% pension after 40 years, plus lump sum Employers meet the costs of providing benefits over and above the employee contribution of 6.35% (currently 14% of salary) Exclusivity clause

4. USS legal structure A trust with a corporate trustee, USS Limited Directors of USS Ltd are responsible for the delivery of the pension promise A separate body in the scheme structure is responsible for negotiations on future benefit changes Structure recognises the importance of a clear division of responsibilities

5. USS funding position: past and present Surpluses in 1980s & 1990s but no contribution holidays 2005 triennial valuation showed a funding level of 77% Inevitability of continued cost pressures 2006 proposal to charge individual universities for cost of early retirement before 60 agreed 2006 proposal to raise retirement age to 65 rejected Next valuation in March 2008 will further clarify cost pressures

6. Forthcoming developments in the education sector Next sector pay negotiation is 2009 Formation of the Employers’ Pension Forum during 2007 to focus the cost of pensions into pay negotiations across the sector UUK Hewitt consultation “Strategic Enquiry into the Pension Arrangements for the Higher Education Sector” to conclude early 2008

7. Where does this leave USS?