Transcript ussuculeeds 2014 - University of Leeds UCU

Threat to USS
Pensions
Threat to USS
Pensions
Why?
USS calculate that the fund is in deficit
Calculation to be released end of 2014
Deficit
expected to be in region of £7.5 billion
Threat to USS
Pensions
Deficit ?
‘Deficit’ calculation
Cost of all future pensions
minus
Assets on 31 March
In reality, no real world scenario would make this calculation meaningfu
Threat to USS
Pensions
Deficit ?
• The USS Trustees are also concerned about the risk that the deficit could continue to grow
and aim to reduce the risk of this happening in the future. They propose to do this by
reducing the investment risk that they take with the USS’s assets.
• If the USS Trustees’ proposals to reduce investment risk were to go ahead, this would
increase the deficit from £7 billion to £13.1 billion.
http://www.employerspensionsforum.co.uk/en/pension-schemes/uss/briefing-on-the-uss--july2014.cfm
Yes, you read that right. To address the risk
that the
‘deficit’ might grow, they increase the ‘deficit’.
They might do better to query the mode of
calculating the deficit of a scheme that is, in
reality,
solvent and growing.
Threat to USS
Pensions
Deficit ?
In reality, your pension scheme has more going in than coming out
Go and see the proof for yourselves:
http://www.uss.co.uk/UssInvestments/Publications/ReportsandAccounts/Pages/default.aspx
Threat to USS
Pensions
Remember 2011?
End to final salary for new entrants
Introduction of Career Average (CRB) tier for new entrants
Over 55s made redundant lost right to unreduced pension
CPI cap introduced to benefits
(increase above 5% CPI halved)
We said if they get to impose CRB for some,
they’d come back to impose it for all. Well…
Threat to USS
Pensions
So what now for 2014?
Employers’ proposals:
• The final salary section of the USS will be closed to existing members.
• The final salary benefits that existing USS members build up before the date the changes are
implemented will be calculated based on their individual salaries at the date the changes come
into force and from that date on will be increased each year in line with the Consumer Prices Index
(CPI). This means that benefits at retirement will no longer be linked to a member’s final salary at
retirement.
• All members of the USS – both existing members and new members – will join the career
revalued benefits (CRB) section of the USS for future service.
• Benefits in the CRB section will be based on the same accrual rate as currently – members will
build up benefits based on an accrual rate of 1/80th of pensionable salary per year. Each year
their benefits will be increased in line with CPI (guaranteed up to 5% with half of any additional
increase in CPI up to 15% i.e. a maximum increase of 10% per year).
• However, benefits in the CRB section will only apply to salary up to a salary threshold (i.e. a fixed
upper amount of pensionable pay). This threshold has not yet been set but, depending on
affordability, Universities UK’s aim is to maximise the number of scheme members who will fall
below the salary threshold.
But that’s not all…
Threat to USS
Pensions
2014
Employers’ proposals:
• A new section of the USS will be created that will provide ‘Defined Contribution’ benefits (which
depend on the amounts contributed, the time they have been invested and investment
performance; they are not guaranteed).
• Alongside the CRB pension, employees in the USS will be able to pay an additional contribution
into a Defined Contribution section.
• Higher earning members whose salary is above the salary threshold will still build up CRB benefits
(plus DC benefits on any additional contributions they make) on their salary up to the salary
threshold, but their pension benefit on salary above the salary threshold will be covered by the
new DC section.
Threat to USS
Pensions
Defined contributions shift risk fully to employees.
If implemented, no doubt in three years they will return to
remove all defined benefits and shift whole scheme to
defined contributions.
‘final salary’ and ‘career average’ are both ‘defined benefit’ schemes.
Threat to USS
Pensions
Conclusions:
We all are being expected to pay huge sums out of our
future pensions to put together a fund to cover an
impossible scenario.
Our employer endorses that.
Threat to USS
Pensions
Illustrations of detriment from proposals
Mid-career profiles - current and proposed total benefits converted to annual pension
Career profile
Current USS final
salary section (£)
Employers' proposals
(£)
Annual loss final salary section members
(£/%)
Age 40, joined scheme at 25, retires at 68 on salary
of £45,954
£33,231
£27,978 -£5,253 -15.8%
Age 51, joined scheme at 36, retires at 68, final
salary of £45,954
£25,235
£22,299 -£2,936 -11.6%
Age 40, joined scheme at 25, retires at 68 on salary
of £54,841
£39,657
£32,316 -£7,341 -18.5%
Age 40, joined scheme at 25, retires at 66 on salary
of £75,000
£46,050
£33,604 -£12,446 -27%
New joiner profiles - current and proposed total benefits converted to annual pension
Career profile
Current USS career
average section (£)
Employers' proposals
(£)
Annual loss career average scheme members
(£/%)
Age 25, joins now, retires at 68 on salary of £45,954
£26,158
£25,481 -£677 -2.6%
Age 36, joins now, retires at 68 on salary of £45,954
£20,597
£19,800 -£797 -3.9%
Age 25, joins now, retires at 68 on salary of £54,841
£30,007
£28,204 -£1,803 -6.0%
Age 25, joins now, retires at 68 on salary of £75,000
£31,917
£28,389 -£3,528 -11.1%
Threat to USS
Pensions
Report from 19 September conference
Ballot opens 1 October, closes 20 October
ASOS ballot - the action will cover:
•
Student assessment and examinations activity
•
Covering for absent colleagues
•
Call-out cover
•
Staff appraisals
•
Job Evaluation
Threat to USS
Pensions
Report from 19 September conference
Ballot opens 1 October, closes 20 October
Members, with designated roles that don’t consist entirely of
assessment and examinations work will not:
• Set examinations or other assessable student work
• Mark or examine any assessable work;
• Provide guidance to students regarding marks, grades or
assessed progress;
• Process marks or assessments (including those dating from before
the boycott);
• Attend or participate in meetings where student work is assessed
or examined;
• Address feedback from external examiners.
Threat to USS
Pensions
Ballot opens 1 October, closes 20 October
Vote ‘Yes’