Thread by @cupofassam

Short USS update: I want to offer a short thread that gives three illustrations of what the negotiated USS agreement implies for people at different salary points. 🧵

Firstly, of course, although the estimates are from our actuary, these are only illustrative, and will not accord necessarily with everyone’s circumstances. That said, I hope they are of interest.

These serve in part to illustrate what difference the value of the flat rate augmentation of £215 will mean for members.

We have chosen the same three personas Aria, Bryn and Chloe that USS used in 2020, because when UUK underestimated their pension losses they all joined UCU and stood on the pickets with us.

£215 is the amount we have agreed should be added to all members’s DB pensions if they have been active in the scheme for any period between 1/4/22 and 31/3/24.

This is by way of seeking compensation for the loss to benefits caused by the cuts in April 2022, now being reversed from 1 April 2024.

In each instance, we start with 3 pension amounts - what they would get as an annual pension had the cuts in 2022 never taken place; what they get following the restoration next year; what they get with that restoration plus the flat rate augmentation.

The first is for a colleague aged 37 on £30k, who has been in the USS scheme for 3 years. This is Aria from the USS modelling. If the 2020 cuts had never occurred and she continued to work full time, with sector average payroll growth, her pension would be expected to be £17,250.

With full future restoration from 1 April 2024 this can be estimated as £17,150 - so slightly down because of the two ‘lost years’. But with the flat rate addition this becomes £17,380 (converting the lump sum into DB).

Such a colleague would now have a higher pension as a consequence of the UCU negotiations than she would have done even if the cuts had never taken place. The compensation more than covers for the 2022 cuts. In addition she saves on contribution rates by 3.7% of salary.

The second, Bryn, is someone aged 43 on £50k and with 8 years in the pension scheme. If his pay increases with sector average his pension without the cuts would have been around £24,800.

With full future restoration from 1 April this is almost restored to 24,590 - but again slightly down from the two ‘lost years’. So on adding the flat rate this recovers and a bit more to £24,820.

He too comes out slightly better off thanks to UCU than if the 2022 cuts and our compensation for them had never happened. But again Bryn benefits from potentially 15 months of contributions at 6.1% instead of 9.8%.

The third, Chloe, is someone aged 51 on a salary on £70k with 18 years service. Without the cuts of 2022 this person could have expected a pension of £30,800. With full future restoration of benefits this is almost restored to £30,440.

Then with the flat rate addition for the lost years this takes it to £30,680. So not fully restored and this person still has some detriment from the April 2022 cuts (but less than 1% of her pension), after factoring in the flat-rate compensation we have gained.

However the 3.7% savings in contribution rates will be higher for higher earners. In Choe’s case potentially £3,700 pre-tax over 15 months.

So depending if she chooses to top up her DC pot with the early savings from the accelerated timeline or how she invests, the gap might be breached to some degree by the DC pot that she will retain.

Solidarity Aria, Bryn and Chole. It's been a long and brutal fight but we stuck together.

You can get your own personal illustration for full future restoration using the modeller made available by USS as part of the statutory consultation but...

...remember this illustration will nit include the additional flat rate of £215 rate plus associated lump sum of £645 - because the consultation is only about full future restoration and not recovery of the lost years ussconsultation2023.co.uk/members

If you haven’t yet completed the USS consultation (as opposed to the yes/no UCU survey with members on this matter), then we very much encourage you to do so while it is still live.

Just because we are on the road to restoration of pre-April 2022 benefits, does not mean that in addition to approving that change you need not suggest more improvement; to accrual rate, to inflation protection, to the salary threshold for DC. And of course the climate crisis.

Thread co-authored with Jackie Grant.