The University Pension Scheme – A Way Forward

David Miles and James Sefton

No 31, National Institute of Economic and Social Research (NIESR) Policy Papers from National Institute of Economic and Social Research

Abstract: 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.

Date: 2021-11
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