The University Pension Scheme – A Way Forward

The University Superannuation Scheme (USS) is trapped between a rock and a hard place. Given its portfolio of assets, it is more than likely that it has sufficient funds to make good on all the pension promises made to scheme members over the years. But it holds risky assets. We propose a way forward.

Pub. Date
26 November, 2021
Pub. Type

The USS is in a difficulty position. If the return on its assets are below expectations then there is a significant probability that it will have insufficient funds to pay these promised pensions. The universities would then be left with a financial hole that would need to be filled.

Universities have said they are already near the limits of what they can afford to contribute and, as a result, the Joint Negotiating Committee (JNC) has recently proposed only marginally increasing contributions, with most of the adjustment to be done by reducing the generosity of future pension rights. As a result, current active members would be paying slightly increased contributions for diminished pension rights.

We propose in this paper that every member is offered the option to transfer out a percentage of the value of their pension into an alternative SIPP (self-invested personal pension). The attractiveness of this option depends crucially on the transfer value of the pension.