Reporter 9/5/00: Universities Superannuation Scheme: Notice

Universities Superannuation Scheme: Notice

The Universities Superannuation Scheme (USS) have announced a number of changes to the additional voluntary contribution (AVC) arrangement offered to members of USS by the Prudential to take effect from 1 April 2000. These changes do not constitute any amendment to the Rules of USS, but are required to be disclosed to members.

1. Additional fund choices

Two new funds will be made available to members

(a) The Socially Responsible Fund

The fund will invest in carefully selected UK companies, selected in accordance with guidelines drawn up reflecting ethical and environmental issues. The aim of the fund will be to achieve long-term growth. Members are however warned that USS consider this type of investment to have a high risk rating.

(b) UK Equity (Passive) Fund

The fund will aim to track the UK Financial Times All-Share Index. Once again the fund has a high risk rating.

2. Unit-linked charges

The highest allocation factor of 102% of the gross amount invested will now apply to all contribution levels. The 5% bid/offer spread will still apply and an annual management charge of 0.75% (0.65% for passive funds) is reflected in the unit pricing.

For members who elected to invest in the Prudential's with-profits fund this represents a reduction from an annual charge of 1%.

3. Scheme communication

Since the introduction of the money purchase AVC arrangement in 1994 the Prudential has provided support to USS institutions via its field staff. A financial review of the contract has highlighted that this is a major component of the Prudential's operating costs. In order to maintain the competitive pricing of the arrangement, more cost-effective, but equally supportive communication methods are to be introduced.

(a) Group presentations

The Prudential has created a team of professional presenters who will offer groups of employees at USS institutions a scripted presentation, which has been approved by USS, about USS generally and the AVC options available to USS members. The aim of these presentations will be to educate employees on their prospective pension entitlement and allow them to make informed choices.

(b) Mailshots

For members who are interested in paying Prudential AVCs, branded literature will be available from the Pensions Section of the Finance Division.

A dedicated call centre will be established by the Prudential to answer queries and provide information.

(d) One-to-one counselling

It is recognized by the Prudential that some institutions have good working relationships with local field staff and this service will be continued temporarily where there is insufficient demand for group presentations; however this facility will be phased out by 31 December 2000.

This change will not affect any relationships employees may have with Prudential representatives in respect of non-AVC matters.

4. Future developments

The Prudential is currently developing e-commerce solutions which will enable its customers to carry out a full range of transactions, including switching investments and requesting benefit statements, on-line. USS is exploring with the Prudential the possibility of adding this feature for USS members during 2001.

Members can obtain further information about these changes from Mrs S. E. Curryer, Head of Pension Administration, 10 Peas Hill, Cambridge, CB2 3PN, tel. (3)32214.

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