Members’ satisfaction with UK higher education’s largest pension fund has declined, amid the continuing dispute over the scheme’s valuation and increased employee contributions.
In its latest annual report, the Universities Superannuation Scheme states that the percentage of its members reporting a good relationship with USS declined in 2019-20 to 24 per cent, from 31 per cent in 2018-19.
Writing in the report, Bill Galvin, the USS group chief executive, says “we are concerned that despite 88 per cent of members reporting that they are well served by USS, they are less positive about their overall relationship with the scheme…We share members’ frustrations at requirements for increased contributions and understand the impact this has on feelings about the scheme.”
Mr Galvin adds: “We hope that, despite the difficult backdrop, it is clear that we work hard every day to make sure benefits accrued with us are secure, and members are as well served as possible.”
The report comes after USS warned in early July that contributions to the fund may have to rise “sharply” after the impact of the coronavirus on financial markets added billions more to its estimated deficit. To protect existing benefits on the current valuation methodology, they would need to rise to 39.2 per cent, USS said.
Members of the University and College Union at 52 pre-92 institutions went on strike for 22 days over the past academic year over increases in contributions to 30.7 per cent of salary – 9.6 per cent from members and 21.1 per cent from employers. Contributions were previously 8 per cent for employees and 18 per cent for employers.
The annual accounts put the estimated funding deficit at £12.9 billion on 31 March, up from £5.7 billion in 2019 and £3.6 billion two years ago. By the end of June this year, this figure had hit £20.2 billion.
The annual report also reveals that the number of “high earners” at USS increased in the last year: in 2019, 131 individuals earned more than £100,000, while in 2020, 144 topped that figure.
This included three people earning over £1 million in 2020, compared with two in 2019.
The report says that Mr Galvin’s salary increased from £459,163 in 2019 to £486,410 in 2020, and that he received a bonus last year of £212,009 – more than double the 2019 figure of £103,419.
“Salaries reflect the experience, responsibility and contribution of the individual and of their role within USS,” the report says.
Mr Galvin said that the 2020 report outlined the position of the scheme against the “challenging backdrop” of coronavirus and its impact on the financial markets.
“Five-year investment performance was strong in absolute and relative terms, and we retained our cost advantage versus peers. Even before Covid-19, historically low interest rates, increased life expectancy, greater regulation, and volatile financial markets had already made promises of a set retirement income for life more expensive,” he said.
“The depth of the economic shock brought about by the pandemic has highlighted the long-term challenges facing open [defined benefit] pension schemes such as the USS; challenges that we intend to work with our stakeholders – Universities UK and University and College Union – to address through the ongoing 2020 valuation.”