Universities Superannuation Scheme (USS) member benefits will return to pre-April 2022 levels by 1 April 2024, subject to the outcome of the 2023 valuation process and consultations, Universities UK (UUK) and University College Union (UCU) have announced.

UUK and UCU, alongside the USS trustee, concluded that improving benefits to pre-April 2022 levels was “demonstrably sustainable” for at least the next two valuation cycles.

Subject to the valuation and consultations, the previous accrual rates for defined benefit (DB) pensions of 1/75 of salary and 3/75 of salary for the retirement lump sum will be reinstated.

The DB salary threshold will increase from £41,004 to within a range of £66,400 and £73,040, depending on the September 2023 CPI rate, and the 2.5 per cent a year cap on pension increases before and after retirement will be replaced with the soft-cap that was in place before April 2022.

Furthermore, the scheme trustee has estimated that total contribution rates need to be 20.6 per cent for benefits to be restored, with the employer and member contribution rates expected to fall to 14.5 per cent and 6.1 per cent respectively.

UUK and UCU have agreed to make a formal request to the USS trustee for the new contribution rate to be implemented from 1 January 2024.

UCU’s higher education committee will vote whether to ratify the agreement tomorrow (6 October), which is then subject to an ongoing consultation of scheme members and proposals that will be submitted to the USS Joint Negotiating Committee on 30 October 2023.

In recognition of the improvement in the scheme’s funding position and the lower scheme benefits from April 2022, UCU and UUK have proposed a one-off DB pension augmentation of £215 to be applied for all eligible members, with an associated £645 retirement lump sum for active and deferred members.

“We are delighted to have been able to agree on an outcome for the 2023 USS valuation which will be good for all members of the UK’s largest private pension scheme, and which will bring down costs for both members and employers," said UUK chief executive, Vivienne Stern.

"This has been possible largely as a result of dramatic changes in economic conditions since the last valuation, including high interest rates, combined with the commitment from employers for additional financial backing – or covenant support.

“When the scheme was in deficit in the past, we took steps to stabilise it. Now that it is in better shape, we are pleased that we can agree to pass on the benefits of the improved position through lower contributions and improved benefits.

"It is vitally important that we stabilise the scheme to avoid future fluctuations in its fortunes. The projected surplus in the scheme is an important protection, but we need to continue to work, with renewed momentum, towards arrangements which will provide longer term stability."

UCU members had taken a total of 69 days of strike action over their USS pensions since 2018, and its general secretary, Jo Grady, commented: “Four years ago, our members were told that winning back their pension was an impossible task. When standing for election, I made it clear that it was only by the whole union pulling together and never giving up that we would win this dispute. Many doubted us.

“69 days of strike action, years of campaigning, protesting and lobbying have brought us to this moment. Today is a historic victory for UCU members. It should also be motivation for every single worker in the UK who has seen their pension slashed. Our members can be rightly proud.

“This is just the start for our union. We have pension justice. We now move on to delivering justice on pay and job security. We will not stop until we create a higher education sector that properly values its staff.”

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