On the go: The Universities Superannuation Scheme has discouraged members from using alternative benefits modellers to work out how they will fare following the conclusion of the scheme’s 2020 valuation, warning that they operate on very different assumptions to those agreed by employers and the trustee.
The University and College Union, which has been locked in a dispute with employer group Universities UK over the outcome of the consultation, has previously published its own alternative benefits modeller.
Developed by First Actuarial, it suggested a “typical lecturer” could face cuts to guaranteed retirement benefits of as much as 35 per cent under the terms of a deal proposed by employers to resolve the 2020 valuation, a deal that has since been agreed by employers and the USS trustee.
UUK disputed this figure and released its own ‘contributions calculator’ showing the cost members would incur if the valuation was not resolved in time.
Another separate model has since emerged. Developed by academics at the University of Bristol, the USS Pensions Calculator tool claims to project the impact of the changes to the USS agreed at the Joint Negotiating Committee, where employers’ reform proposals were recently passed by a narrow margin.
The USS Pensions Calculator website states: “We present projections of your future pension income from defined benefit (where you accrue income each year) and defined contribution (where you have your own investment) and the total value of benefits, including lump sum, based on the assumptions used in the USS 2020 valuation.”
Its front page hosts illustrative comparisons claiming to show the deleterious effects of the employers’ reform proposals on both total pension value projections and annual income projections.
A projected total pension value of £689,115 under the current scheme would see a 37 per cent cut under UUK’s proposals, falling by £255,388 to £433,727.
A projected annual income of £17,273 would fall by 36 per cent to £10,971.
In a statement, the USS trustee said the model “has not been reviewed or validated by the trustee, and is not affiliated in any way with the trustee or the USS”.
“It only projects future pensions being built up, and includes a number of assumptions on DC investment returns, salary growth and inflation that in some cases differ significantly to those that were approved by UUK for the purpose of the employer consultation,” the trustee explained.
It added that it would “be of concern” if members “were to rely on those modeller outputs for decision-making”.
“We would encourage any members who want to understand the impact of the changes on their USS benefits to use the consultation modeller in the first instance, which will be shortly replaced by an updated benefits illustrator, to be made available on the USS website from early April,” it continued.
“We recommend that members speak to a financial adviser before making, or refraining from making, any decisions in relation to their USS benefits.”
