Universities UK (UUK), the representative group for employers in the Universities Superannuation Scheme (USS), has revised proposals to manage the scheme’s deficit as trade unions continue industrial action plans.

The £41.6bn (€50.3bn) USS saw its latest published report suggest the scheme’s triennial valuation to reveal a “substantial deficit”, with expectations of £8bn.

In response, sponsoring employers of the scheme, mainly UK universities operating before 1992, began consulting on changes to the USS model, including ending its final-salary defined benefit (DB) offer and moving all members to career-average DB, which it began in 2011 for new members.

The new proposal would also include a defined contribution (DC) hybrid.

The trade union representing members, the University and College Union (UCU), began balloting on industrial action after modelling showed some members would lose a significant amount of retirement income.

UUK has now brought a slightly revised proposal to the negotiating table to help convince members of the necessity of the reforms.

Its original proposal was to have a DB career-revalued earnings (CRE) for all members, up to £40,000 of salary, and a DC arrangement for earnings thereafter.

However, the UCU said the £40,000 threshold was unacceptable, and UUK has since increased this to £50,000 and announced that member contributions would remain flat at 6.5% while sponsor contributions would increase by 2 percentage points to 18%.

The UUK said that it would come into effect in April 2016.

It added that, with new proposals, two-thirds of members currently earning career revalued benefits would see their pension remain entirely the same, until they earned more than £50,000.

It also said keeping the 6.5% member contribution rate was linked to an agreement on the £50,000 threshold not being forced any higher.

Professor Anton Muscatelli, chair of the Employers Pensions Forum (EPF), said: “The changes proposed are designed both to address the substantial deficit in the USS and to mitigate the risk that contribution rates will become unaffordable for both employees and employers.

“Any pensions already in payment or deferred in the scheme will not be affected at all by any of these changes, and past service accrued rights are protected by law.”

However, the UCU said the proposals were not massively different to the original version, and that the ballot would continue to run for members to take industrial action.

Head of bargaining Michael MacNeil said: “We do not accept the way the scheme’s deficit is being valued or share the overly cautious and pessimistic view.

“Like the UUK, we want a solution that protects the pensions of staff and ensures the scheme remains attractive to new members of the profession.

“But what the UUK proposals try to do is substantially shift risk from big institutions on to our individual members’ shoulders.”

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