Universities Superannuation Scheme

kidmugsy

USS is the biggest private DB scheme in the country. For a dozen years and more I've thought that USS was in the soup. Now, after denials, half-denials, half-admissions, and half-arsed attempts to deal with the problems, it seems that there is to be a more radical attempt. It involves closing the DB section to further accruals. Other people who have been subjected to a similar procedure may find it possible to withhold their tears.

I sympathise with the active members: I hope they respond with greater good sense and intellectual rigour than did those managing the scheme. It will be interesting to see whether the strange new boss class that has emerged in the universities over the last couple of decades can match in folly, preening, and dishonesty the relevant trade union leadership. Probably not.

https://henrytapper.com/2017/11/18/a-brave-and-timely-response-to-uuks-proposals/

Southend1

I guess I’ll be job hunting in the new year then. Working in HE is already verging on unbearable due to marketisation but screwing over my retirement plans will be the last straw. I had hoped (by saving every penny I can for the next 25 years, approx 10% additional contributions to USS investment builder) to retire at 60 on £20kpa. Not too much to ask one would think, for a lifetime of saving. I can’t afford to take the risk of a 100% D.C. scheme for the next 25 years. Never mind eh, the VCs are doing well for themselves. B******s.

kidmugsy

Southend1 wrote: »

retire at 60 on £20kpa.

Unless you are one of an unusual group that can draw DB money at 60 without penalty, wouldn't you be better off with an all-DC scheme?

hyubh

kidmugsy wrote: »

It will be interesting to see whether the strange new boss class that has emerged in the universities over the last couple of decades can match in folly, preening, and dishonesty the relevant trade union leadership. Probably not.

One question to me is how the pre-/post-92 split between offering the USS or the TPS for teaching staff is going to fly in the future. It's only been a year or two that USS employers had to account for their participation in the scheme on a proper FRS 102 basis rather than a cash contribution one. TPS participation, in contrast, will only ever be quasi-DC from the employer perspective, despite being good quality DB from anyone else's (including the employee's).

Southend1

kidmugsy wrote: »

Unless you are one of an unusual group that can draw DB money at 60 without penalty, wouldn't you be better off with an all-DC scheme?

The plan was to use a previous D.C. pot and the USS investment builder to fund 60-67 before drawing the D.B and state pension at 68.

As to whether I would be better off with an all D.C. scheme, I wouldn’t know until retirement age. By then it may be too late and I might have to hang on until 68 or beyond before retiring. The risk of that happening is too great for me, unless we are compensated adequately for that risk through increased salaries, the probability of which is almost zero.

dunroving

Having worked in higher education in the US (where most academics are in a defined contribution, choose your investments style pension schemes), I feel fortunate to have benefitted from 11 years in the USS scheme, which has allowed me to retire early just recently.

I did a rough and ready calculation recently, to compare my 9 years in the US system with my 11 years in the UK system, and the latter has yielded an income of approximately 2.5 times the former.

Although the rationale behind these latest changes to USS seem to be based on faulty logic (or politics, or maths, whatever), it seems clear to me that the gold plated pension has been getting unsustainable for a long time now. Even the idea of basing pension on final salary is patently unfair and illogical, and I welcomed the move to an average salary basis, even though the consequences were negative for me on a personal level.

Like academics in the US, UK university lecturers will have to start applying their intelligence to learning about investment and personal finance. Seems like it is a like it or lump it situation. I don't see that striking is going to lead to anything different.

hyubh

dunroving wrote: »

Seems like it is a like it or lump it situation. I don't see that striking is going to lead to anything different.

Keeping the current setup, though with the point at which accrual switches to DC being pushed down quite a bit? (The - still very new - current version of the USS is a hybrid scheme.) Potentially achievable from a union POV, unless the employers go hard on their latest line of stopping DB accrual completely. Also the caveat that many UCU members might think, better go full DC if the DB limit is significantly brought down and funded with very cautious assumptions.

kidmugsy

Southend1 wrote: »

... unless we are compensated adequately for that risk through increased salaries, the probability of which is almost zero.

Fair enough. One strange phenomenon in all sorts of financial and economic discussions is the extent to which people think you can analyse changes in isolation. My view is that if you change the terms of someone's employment then naturally you must expect other changes in response.

As for your leaving: I am reminded of an internet wag who, whenever the subject of the universities arises, intones "Dissolution of the Monasteries".