USS: what happens to contributions between January and April 2024?

NickBFS

I understand that the rate of contribution goes down from 9.8% to 6.1% from January (and employers contribution down from 21.6% to 14.5%) and I also understand that we return to the pre-April 2022 benefit structure from April onwards. 

What I am unclear is how the system works in the January to March 2024 period with the decreased contributions. How will these be allocated? Specifically, contributions to the IB under the current system were premised on a 9.8% contribution, with 8% of these (+12% from employer's contributions)  above the salary threshold being allocated to the IB. How can this still work if employee and employer's contributions go down to 6.1% and 14.5%? What exactly gets allocated to the IB during that interim period?

Simes122

Good question, following out of interest.

spiralir

My understanding is that the RIB pension continues to accrue at 1/85 upto the current salary threshold (£41,004) until next April, while a contribution equal to 20% of salary above this threshold continues to be paid into the IB pot (6.1% employee contribution, 13.9% employer contribution).  Next April the accrual rate changes to 1/75 and the salary threshold to ~£70,308. I assume these improvements are partly due to a more optimistic valuation of USS’s financial position.

ussdave

spiralir said:

My understanding is that the RIB pension continues to accrue at 1/85 upto the current salary threshold (£41,004) until next April, while a contribution equal to 20% of salary above this threshold continues to be paid into the IB pot (6.1% employee contribution, 13.9% employer contribution).  Next April the accrual rate changes to 1/75 and the salary threshold to ~£70,308. I assume these improvements are partly due to a more optimistic valuation of USS’s financial position.

I think you've nailed it there.  At least, that was my understanding too after having a similar query and reading up on things a little.

I've not done the calculations but I do wonder if the remediation (the uplift in RB benefits accrued) disproportionally effects staff with salaries above the current cap, as they'll have "double dipped" with addition IB payments.  Then again, those below the cap might not have accrued quite as much as they're going to get from the uplift.  It'd be interesting to look at the impact at a range of salaries sometime.

bluebirdy

ussdave said:

I've not done the calculations but I do wonder if the remediation (the uplift in RB benefits accrued) disproportionally effects staff with salaries above the current cap, as they'll have "double dipped" with addition IB payments.  Then again, those below the cap might not have accrued quite as much as they're going to get from the uplift.  It'd be interesting to look at the impact at a range of salaries sometime.

Very helpful Twitter/X thread on this from one of the UCU negotiators, here: 
https://x.com/cupofassam/status/1714965545517285624?s=46

If I remember correctly, those of us on higher salaries in the DC portion lose out a little over time (but this offset by having more DB benefits anyway).

squawkbox

Perhaps this is a little off topic, but what are current members in the USS planning to do with the decrease in the employee contribution rate?  

Take the extra salary or put that 3.7% difference in the DC part of the scheme? Or something else?

ussdave

bluebirdy said:

ussdave said:

I've not done the calculations but I do wonder if the remediation (the uplift in RB benefits accrued) disproportionally effects staff with salaries above the current cap, as they'll have "double dipped" with addition IB payments.  Then again, those below the cap might not have accrued quite as much as they're going to get from the uplift.  It'd be interesting to look at the impact at a range of salaries sometime.

Very helpful Twitter/X thread on this from one of the UCU negotiators, here: 
https://x.com/cupofassam/status/1714965545517285624?s=46

If I remember correctly, those of us on higher salaries in the DC portion lose out a little over time (but this offset by having more DB benefits anyway).

Thanks.  Unfortunately it seems to require a login to Twitter/X.  

squawkbox said:

Perhaps this is a little off topic, but what are current members in the USS planning to do with the decrease in the employee contribution rate?  

Take the extra salary or put that 3.7% difference in the DC part of the scheme? Or something else?

Due to current cashflow and a significant uplift in mortgage payments I'm temporarily keeping 2.7% and just increasing my extra IB payments by the remaining 1%.  Over the next 12-24 months I want to move back towards putting it all in though.

Cornish_mum

squawkbox said:

Perhaps this is a little off topic, but what are current members in the USS planning to do with the decrease in the employee contribution rate?  

Take the extra salary or put that 3.7% difference in the DC part of the scheme? Or something else?

I am putting this extra into the USS investment builder, as is my husband.

CM

bluebirdy

ussdave said:

Thanks.  Unfortunately it seems to require a login to Twitter/X.  

Does this version/link work without a Twitter login? https://threadreaderapp.com/thread/1714965545517285624.html

ussdave

bluebirdy said:

ussdave said:

Thanks.  Unfortunately it seems to require a login to Twitter/X.  

Does this version/link work without a Twitter login? https://threadreaderapp.com/thread/1714965545517285624.html

Yes it does.  Thank you again

edit: Useful illustration.  I've shared it with a few colleagues also in USS.

Pendle_Gazza

squawkbox said:

Perhaps this is a little off topic, but what are current members in the USS planning to do with the decrease in the employee contribution rate?  

Take the extra salary or put that 3.7% difference in the DC part of the scheme? Or something else?

I'm hoping I'll shove most of my "extra income" into a personal SIPP. Whether that happens is another matter lol. 

Once no more will be added to my DC from April with the salary threshold reversal, I'm also considering moving what's been accumulated in there into the same personal SIPP.