Changes to Universities Superannuation Scheme

Tuesday, 26 April 2016

Following the 2014 valuation of the Universities Superannuation Scheme (USS) and the consultation which took place in the early part of 2015, changes to the benefit structure and contribution rates have been implemented with effect from 1 April 2016.

Need to know

The main changes USS members need to know are as follows:

• The cessation of accrual of final salary benefits and the closure of the final salary section took effect on 31 March 2016;
• Benefits accrued in the final salary section are protected for existing members;
• All members have been moved to a Career Revalued Benefits (CRB) basis with pension build up of 1/75 of pensionable pay with a lump sum of three times pension;
• An increase in employee and employer contributions to 8% and 18% respectively;
• A salary threshold above which benefit build up is on a defined contribution basis rather than a defined benefit basis.

When are the changes taking place?

The main change to a CRB basis came in from 1 April 2016 with the final salary section being closed to future accrual from that date. Contributions also increase from that date.  At the same time, National Insurance contributions have increased by 1.4% of band earnings due to the cessation of contracting out, so USS members will see an overall reduction in their net pay in April.

The salary threshold will be introduced from 1 October 2016, so from this date, contributions on pensionable earnings over £55,000 will go into a new defined contribution (DC) part of the scheme. Look out for further information on this new DC arrangement including details of the available investment funds over the summer.

Further information can be found on the new USS website. This is in the process of being updated to reflect the move to the new benefit structure.