By email Henry Tapper 30 June 2026
Conditional Indexation at USS – A response to your Blog 26 June 2025
I write as one of the University & College Union members of the USS Stability Working Group considering Conditional Indexation as an option for the scheme and in response to your recent blog on the CI Interim Report published on USS website.
As you have reported in the past, UCU members have had cause to take significant industrial action to protect not just their own pensions but the future of the USS scheme as a defined benefit scheme that provided good pensions for its members in retirement. Not just for its current members but those still to join in the future.
Following the implementation of the 2023 valuation, UCU and the employers’ association, UCEA, agreed to establish a Stability Working Group to reduce volatility in the scheme and protect pensions going forward. This work fell into two main areas. The first was changes to valuation methodology and UCU has made proposals to the USS Board that would change the valuation methodology, reduce the gilt-yield related excessive prudence seen in the 2020 valuation, and provide, we believe, a firm platform for future valuations ensuring moderate prudence and reduced volatility in the scheme. This work continues.
We are also investigating whether Conditional Indexation could improve on the current indexation process, increase stability and provide scheme members with better returns.
While this work is ongoing and much remains to be investigated, understood and verified, it has thrown up some serious concerns for us.
Transfer of Risk – we believe introducing CI would mean a significant transfer of risk from employers to scheme members, as applying CI and so not paying for currently guaranteed inflationary increases only impacts scheme members and not employers. So we are considering mitigations to this transfer of risk but we have long way to go before UCU would be content.
Improved Member Benefits – mention has been made of improving the benefits members receive but little has been agreed around what this might look like. And a catch-up arrangement for losses when CI is not applied still needs to be agreed.
Governance – we remain concerned about current governance arrangements. We have had engagement with schemes in Canada where CI has been in place for some time and this shows very different governance arrangements where importantly there are equal numbers of employer and employee representatives which is not the case in USS. We also need for information on how decisions on CI will be made, what input stakeholders will have and how members will be consulted and communicated with.
Regulatory Environment – Our engagement with Canadian schemes has shown they have a very different regulatory environment where specific legislation was passed to support Conditional Indexation to ease its introduction. Current regulatory requirements in the UK do not aid the introduction of CI.
Intergenerational Fairness – it has been referenced that CI will increase intergenerational fairness but we have not yet seen enough evidence to be convinced this is the case. More work needs done to meet any commitment on intergenerational fairness.
Timescale – The Canadian schemes negotiated and introduced CI over many years, some up to 10 years, and while there are no agreed timeline for CI at the moment, it is clear that employers would like CI introduced sooner rather than later. UCU and scheme members need time to properly consider all evidence and will not be rushed into CI.
Finally, the issue of trust runs through this work. As you have highlighted in multiple important articles over the years USS has had a long and sorry history regarding trust in their validations, and as you suggest, it will be vital that USS and UCEA work collaboratively with UCU as the recognized trade union to rebuild this trust . In conclusion, UCU policy is to investigate Conditional Indexation as an option for USS but it must also be noted that the UCU reps leading negotiations remain sceptical to the benefits of CI for members.
Thanks for the opportunity to make these points.
Yours
Dooley Harte
UCU Pension Official