We should stress here, that all of the information in this blog is purely for information purposes. It does not in any way constitute advice on your decisions regarding your pension. UCU urges anybody who has any questions regarding their pension to obtain financial advice. The branch will be hosting a session on 21 February 2018 featuring a qualified advisor who can help with your decisions. Alternatively, you can contact UCU's appointed provider of financial advice, Lighthouse Financial Advice Limited. Details here: https://www.ucu.org.uk/financialadvice
Members will doubtless be aware of the result of the recent ballot of UCU members at USS-affiliated branches (see the results here). While the outcome of the dispute remains uncertain, the impact on USS pensions will be negative, even in the best-case scenario. As we have reported before, some Northumbria branch members still pay into the USS scheme, even though the vast majority pay into the Teachers' Pension Scheme, which is the contractual scheme of the university. Debate still rages over the valuation of the USS scheme, but even UCU's official position involves members and employers paying more into the scheme while receiving less.
USS's proposal is to end the defined benefits scheme entirely. On 1 April 2019, all of USS members' future pension contributions will go into a 'defined contributions' pot: ie they will receive a pension based on how much money is in the pot (so putting trust in the USS investment scheme to earn money). All contributions in the 'final salary' part of the scheme (contributions until 31 March 2016) and 'career average' part of the scheme (contributions between 1 April 2016 and 31 March 2019) will remain locked, so an element of the pension related to earnings will remain. Happily, members will still pay the same amount into the scheme, but the calculations suggest that the defined contributions pension will pay out less in your retirement than a salary-linked one.
UCU's proposal, on the other hand, is to increase contributions from employers to 23.5% of salary (from 18% at the moment) and employees to 10.9% (up from 8%), ending the deal whereby the employer adds another 1% if you choose to put in an extra, voluntary 1% into the defined contribution scheme and cut the calculation of the defined benefit from 1/75th of your salary to 1/80th. Again, a worse deal.
Happily, USS members at Northumbria are able to switch to the TPS if they wish, and if they choose to do so will enter the part of TPS where your pension is calculated using your career average salary. You may access a formal comparison of the two schemes here. Your benefits up to the date you switch can remain in the USS scheme or you can choose to move them to TPS, but if you choose the latter option you will lose a proportion while any future contributions will go into the TPS scheme. You will also pay a different contribution rate:
Up to £26,259.99 7.4%
£26,260 - £35,349.99 8.6%
£35,350 - £41,914.99 9.6%
£41,915 - £55,549.99 10.2%
£55,550 - £75,749.99 11.3%
£75,750 and above 11.7%
The university's pensions office (located in Human Resources) can help you with the switch. To reiterate, we cannot offer financial advice on your pension and urge all USS-paying members to obtain financial advice.
Membership Secretary, Northumbria UCU