Carol Young points out
Up to a fifth of people eligible to join USS currently opt out – and the most common reason is affordability. I hope the improving benefits, potential uplift and member contribution rates coming down from 9.8 per cent of salary to 6.1 per cent will prompt that group to reconsider. I’d encourage them to read the information on our website and speak to their employers if they have questions.
What is the point of having a scheme of the size and stature of USS if 20% of those eligible for it, have decided to get off the ride?
And why should the ride be so bumpy?
The point of a pension scheme is that it can take a long term view. The duration of the liabilities of USS , were it to close today, would probably be at least 90 years (when you consider the younger spouses of younger members). Will people this time next century really be worrying about the financial crisis’ of the 2020s and 2030s?
It is genuinely encouraging to read this paragraph from USS’ new CEO
As an open DB scheme supported by a strong employer covenant, we take a long-term view of investment. Our strategy focuses on investing in “growth” assets alongside assets that help hedge against inflation and interest rate changes. Our globally diversified approach reduces the impact of any single investment, but inflation and interest rates can influence the value of our liabilities and so affect the funding position.
We know that USS has made mistakes in its investment strategies and that includes the injudicious investment in Thames Water, but these mistakes are forgivable when made for the right reason. What is unforgivable is the lack of nerve that was present when the scheme decided to lock its assets down, retreat from productive investment and assume it was in an endgame.
Thanks to our regular correspondent in the frozen north for bringing this article to my attention . He leaves us with one thought that doesn’t come from Carol Young but from the PPF
“USS members now account for almost a third of the fewer than 740,000 people in the UK still actively paying into private DB schemes”
That really is quite a staggering statistic. https://t.co/eiagpggNCr
— Mike Harrison (@HigherEdActuary) February 1, 2024
Offering deferred pay by way of a pension is a most efficient way to reward staff, to keep staff and recruit staff.
It is amazing to think that only a few years ago we were seriously talking about closing USS for future accrual. Could the UCU with their brave action , have created an inflection point – even prior to the recovery in gilt yields that has floated so many schemes back into seeming solvency?
I think we owe the brave voices that stood out against the groupthink a great debt of gratitude. They deserve a new CEO like Carol Young and Carol Young should continue to listen to them.
Carol Young