The USS Trustee
United Kingdom

The purpose of this petition is to enable USS members to speak with a single voice in opposition to two fundamental aspects of the proposals put forward by the Joint Negotiating Committee (JNC). These are:

1) benefits accrued under final-salary component to be based on salary at March 2016 (revalued), rather than salary at retirement;

2) index-linked revaluations to be capped. (This condition was introduced in the 2011 reform, and is retained in the new proposals.)

The argument for opposing (1) is a point of principle. Members who have accrued benefits under the final-salary component did so on the understanding that the associated pension would be a defined proportion of their salary on retirement (or on leaving the scheme). Whatever the small print of the scheme rules, natural justice demands that USS should not go back on this undertaking. There is also the matter of trust; if the goalposts have been retrospectively moved once, they could be again. Universities UK should consider carefully the impact of setting such a precedent on both current and prospective employees.

The cap on index-linked revaluations applies progressively from 5% (no cap) to 15% (actual revaluation limited to 10%). Although these figures appear reassuringly high in the context of current inflation levels, it's not necessary to go very far back in time to find a period during which the cap would erode benefits significantly in real terms. Hence it undermines a feature that's crucial to a well-founded pension scheme: predictability. It also seems impossible to justify; the assets of a competently managed fund should not be devalued by inflation. It should never have been introduced, and should be removed as part of the current reform.

The JNC proposals for USS reform are unsatisfactory. As a minimum prerequisite for acceptability, two fundamental changes are required.

1) Calculations of accrued benefits under the final-salary section should respect the commitment made when those benefits were earned: to pay a defined proportion of a member's salary at the point when they retire (or leave the scheme). Even if the current proposals are legal in this regard, they represent a breach of trust.

2) The cap on inflation-linked benefit increases should be removed. With this cap in place, members lack the security that a reputable pension scheme should provide. Furthermore, assuming future USS investment strategy to be competent, a cap cannot be justified on viability grounds.

The Do not accept the JNC proposals for USS reform petition to The USS Trustee was written by William Graham and is in the category Employment at GoPetition.