USS proposed pension changes.

kidmugsy

hyubh wrote: »

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

If memory serves, you were the dolt who claimed that everything was just tickety-boo at USS. Care to explain that idiocy now?

It's draconian if poor old Moneyer had been given to understand by USS that his accrued benefits would buy him a fraction of his final salary only to find that they'll actually (if the proposals are adopted) buy him a fraction of what his salary was at the moment the scheme rules changed. Presumably they could pull the same stunt when the CARE scheme proves unaffordable; swap to DC and tell the members that their career average will be computed up to that instant, not to retirement. With that in prospect I'd imagine many young academics ought to consider clearing off and finding something else to do with their lives.

Moneyer

greenglide wrote: »

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

USS won't pay any pension while remaining in post full-time. I think you can take n% of pension while working (100-n)% part-time after retirement age, but of course that still reduces the load on the scheme compared to full retirement….

Moneyer

kidmugsy wrote: »

Presumably they could pull the same stunt when the CARE scheme proves unaffordable; swap to DC and tell the members that their career average will be computed up to that instant, not to retirement.

Yes, this worries me. What exactly does "defined benefits" mean anyway, if loopholes can be found to reduce the promised benefits whenever the fund value is too low? (But not, of course, to increase benefits when the fund value is too high: when that happens the employers take a contribution holiday….)

Taking this to its logical conclusion, it starts to look like the only difference between DB and DC is that there is a cap on what you win from a DB scheme if the going is good….

kidmugsy

Moneyer wrote: »

(But not, of course, to increase benefits when the fund value is too high: when that happens the employers take a contribution holiday….).

No, that's unfair. When USS supposed itself to be flush with funds, it indulged in expensive hobbies such as subsidising early retirements rather than demanding that the employer pay for the extra actuarial cost, and paying out pensions on effectively bogus late-career promotions. The employer contribution did go down a bit but only (if memory serves) to 14%, which ain't a holiday.

Companies that took a holiday often did so on Treasury instruction, HMG taking the view that if the company contributed to a pension scheme in surplus it was effectively just dodging tax. That even the clever Nigel Lawson could make such a stupid decision teaches us that humans don't half have the ability to !!!! things up.

hyubh

kidmugsy wrote: »

If memory serves, you were the dolt who claimed that everything was just tickety-boo at USS. Care to explain that idiocy now?

I'm sure you can dig up the posts. Believe it or not, I hold the following views all at the same time:

- That the discount rate used by the USS seems a bit high
- That using a discount rate of 4% or whatever would nevertheless be unreasonable, and for the reason the USS itself gives
- That closing the FS section to future accrual is (a) fair (b) a prudent cost saving measure (c) not an indication of panic
- That when discussing the USS, the LGPS is a useful point of reference, notwithstanding the fact the USS is run by its own limited company

It's draconian if poor old Moneyer had been given to understand by USS that his accrued benefits would buy him a fraction of his final salary only to find that they'll actually (if the proposals are adopted) buy him a fraction of what his salary was at the moment the scheme rules changed.

I can't parse what you're trying to say, sorry. When moved into a new CARE scheme, the OP's final salary membership will become deferred, as if the OP had left academic employment at that point. By using the the word 'fraction', do you mean to imply the OP won't actually get a full DB...?

Presumably they could pull the same stunt when the CARE scheme proves unaffordable; swap to DC and tell the members that their career average will be computed up to that instant, not to retirement.

You've lost me... Are you saying you think CARE benefits already accrued will suddenly have their revaluation rate changed to nil?

hyubh

Taking this to its logical conclusion, it starts to look like the only difference between DB and DC is that there is a cap on what you win from a DB scheme if the going is good….

Which would be completely wrong. With a deferred FS pension and an ongoing decent CARE one you will still be better off than most private sector workers.

Moneyer

hyubh wrote: »

Which would be completely wrong. With a deferred FS pension and an ongoing decent CARE one you will still be better off than most private sector workers.

True, but only in so far as it actually pays out what it promises. I'm paying in thousands now, but health permitting it will be 30+ years before the scheme pays me a penny. At present, it looks like the entire basis of the scheme is being torn up and rewritten every 5 years, with previous promises about benefits apparently not sacrosanct. Wouldn't it be naive to assume what I actually receive will bear any resemblance to what I'm currently being promised?

kidmugsy

Moneyer wrote: »

At present, it looks like the entire basis of the scheme is being torn up and rewritten every 5 years, with previous promises about benefits apparently not sacrosanct. Wouldn't it be naive to assume what I actually receive will bear any resemblance to what I'm currently being promised?

This is where a union mindful of members' interests might make itself useful. In my day, however, the union officers seemed mainly to be interested in finding themselves safe Labour seats rather than looking after the members.

When I was on the local committee you only had to mention the national officers to provoke a mass rolling of eyes.

greenglide

Moneyer wrote: »

True, but only in so far as it actually pays out what it promises. I'm paying in thousands now, but health permitting it will be 30+ years before the scheme pays me a penny. At present, it looks like the entire basis of the scheme is being torn up and rewritten every 5 years, with previous promises about benefits apparently not sacrosanct. Wouldn't it be naive to assume what I actually receive will bear any resemblance to what I'm currently being promised?

The scheme is in a state of change (again). It is by no means the first scheme to change (LGPS, NHS spring to mind). While it does seem something of a panic as they really ought to have got it right when the CARE scheme was introduced and done all the changes then.

But they didn't. You can look at it two ways. "At least I got an extra few years of the extremely valuable final salary scheme" or "Boo hoo they have taken my benefit away".

Since other schemes have managed to convert existing members to CARE what is different about USS. Really?

Clearly closing schemes to further accrual (which is what is being proposed here) is possible and legal, lots of schemes have done it in the private sector. Most of the true private sector schemes tend to have replaced Final Salary with DC schemes, you are being offered a DB scheme which is CARE, many people would snatch your hand off if offered.

Deal with it. Go to your union.

Can you respond to the proposal? Seems a way to go.

kidmugsy

greenglide wrote: »

Clearly closing schemes to further accrual (which is what is being proposed here) is possible and legal, lots of schemes have done it in the private sector.

But have they all decreed that the salary to be used for calculating that part of the member's pension will not be his final salary but instead a salary from part way through his career?

That's the point of Moneyer's complaint. He feels that he's been misled. I'll bet he has: it's the problem (I'm guessing) of the difference between the happy chat of scheme leaflets and the grim reality of the trust deeds.