USS proposed pension changes.

Andy_L

Moneyer wrote: »

My argument would be that the benefit accrued is the right to a given proportion of my eventual final salary. This accrued benefit is clearly NOT being preserved.

You would , as said above, see what the scheme rules actually say. Do they define final salary as final only when you retire or does it define final as also being when the scheme closes?

Pincher

It's very simple, they want to pay out less, now or in the future.
There is a really nasty trick some people who are on bonus systems should look out for.

Let us say your salary was normally £50k a year. Some human resource person decides that it will be split into a £40k salary, and the rest counted as bonus, so that average performance will get you £10k, so you end up with £50k like before, but if you work hard, you can get £15k+£40=£55k. So far so fair enough. But as far as the final salary scheme is concerned, your official salary is £40k, not £50k!

There was a tax incentive thing around 20 years ago, and we could switch to a bonus based set up, or just stay on a straight salary. The incentive was the bonus portion was tax free. Guess what, when the redundancy came round, the redundancy entitlement was a multiple of the salary portion, and the bonus did not count!

FatherAbraham

kidmugsy wrote: »

For what little it's worth, I wouldn't be too surprised if it were eventually replaced by a DC scheme.

I'm surprised that anyone gets a DB scheme these days. They are so ridiculously expensive and risky, with so little benefit to the employer.

Warmest regards,
FA

Moneyer

Andy_L wrote: »

You would , as said above, see what the scheme rules actually say. Do they define final salary as final only when you retire or does it define final as also being when the scheme closes?

I had a look at these, and needless to say it is hard for a layman to follow! As far as I can see, the benefit at normal pension age is calculated as 80th's of "pensionable salary" which is calculated at the "relevant date", which is defined as follows:

"Relevant Date" means, in relation to a member or former member, the date of actual retirement in the case of late retirement under rule 10 or sub-paragraph 7.2 of schedule 1 (Late retirement), and in all other cases, whichever is the earliest of the date of cessation of eligible employment or of service or death or the day before normal retirement age, provided that in all cases the date is no later than the day before the individual's 75th birthday.

"Service" is basically defined as a period of "eligible employment" so it comes down to when that ceases. "Eligible Employment" helpfully means "employment as an eligible employee".

So I guess they would have to argue that by them closing the scheme, I cease to be an "eligible" employee. This seems a bit tenuous to me, and I presume in resolving any ambiguity in the rules a court would put some weight on how it had been advertised to members (i.e. leaflets!) after all…..?!

kidmugsy

Moneyer wrote: »

I understand that USS is backed on a last-man-standing basis by all the employers: so the trustees have the right to extract every penny from every university in the country before the scheme fails to meet its obligations. The value of prime central London property owned by UCL, Imperial and others would probably plug most of the funding gap for accrued benefits.

People tend to quote the last-man-standing principle as a strength, but it could equally well be a weakness: you could get a positive-feedback vicious circle of insolvencies. Suppose some upheaval pushes many of the universities into insolvency. As each one folds it pushes the costs of the scheme onto the remainder, increasing the risk of them folding. Eventually you have an inverted pyramid where everyone's pension is going to be paid by Trinity, Cambridge.

P.S. The central London universities - I read a few years ago that one of them (UCL? IC?) didn't own the land under it. Does either of them?

hyubh

greenglide wrote: »

For many, many people that will be a good, good deal if they do not expect to see inflation linked wage rises.

Indeed, though presumably there are some figures behind going either one way or the other? My guess would be that deferring final salary actives would save a bit of money for the USS where the opposite is the case for the LGPS, given the respective membership profiles... but that's just speculation.

Be grateful.

Dare one say, but the scheme was silly not to push existing members into the then-new CARE section back in 2011...

So in what way is it worse than the LGPS and similar schemes that have changed to CARE

Indeed - it's hardly 'draconian'.

hyubh

kidmugsy wrote: »

On the subject of USS I had a ding-dong a year or so ago on this forum with another regular poster. I said the scheme was under the weather; he implied it was bursting with health. Draconian proposals rather suggest that I had the right of it.

Someone's got rather excited today, eh? What would you be like if something actually 'draconian' happened, I wonder...

Moneyer

I'm a bit sceptical about whether the hole in USS is as bad as it seems, because of a feature of academics which they probably haven't accounted for: at least where I am many people don't want to retire and are making full use of their new rights to stay in post past 65. Some have told me they intend to go on as long as they can physically give a lecture. If this is a general trend, I presume it will save USS a fortune….

greenglide

..... but many schemes allow you to take the pension while still working either full or part time.

hyubh

greenglide wrote: »

..... but many schemes allow you to take the pension while still working either full or part time.

The USS has a flexible retirement option similar-ish to the LGPS:

FS section - http://www.uss.co.uk/Factsheet%20List/FlexibleRetirementFS.pdf
CARE section - http://www.uss.co.uk/CRB%20Factsheet%20List/Retirement%20and%20Flexible%20Retirement%20Factsheet%20v8%200.pdf