Reporter 17/5/00: Universities Superannuation Scheme: Notice

Universities Superannuation Scheme: Notice

15 May 2000

Nineteenth Deed of Amendment

The Council give notice that the Universities Superannuation Scheme has been amended by the Nineteenth Deed of Amendment, dated 25 February 2000.

Before July 1999 the Pension Schemes Office of the Inland Revenue (PSO) required pension benefits from additional voluntary contributions (AVCs) to be taken at the same time as the main scheme benefits. In July 1999 the PSO relaxed this requirement so that members of pension schemes paying AVCs could elect to receive the pension benefits in respect of their AVCs at a different time from their main scheme benefits, provided this was not before age 50 or after age 75. Pension schemes were not required to allow their members to take advantage of this change, but, if they wished to do so, were required to amend the scheme rules.

The Nineteenth Deed of Amendment allows those USS members who are paying AVCs to the money purchase AVC arrangement offered by the Prudential to take advantage of this relaxation by giving them the option to defer purchasing an annuity in respect of their money purchase AVCs until such time as they wish, provided this is before the member's 75th birthday.

Although the PSO relaxation also permitted AVC benefits to be taken before the main scheme benefits, provided this was not before age 50, and for income drawdown facilities to be made available to allow set proportions of AVC benefits to be brought into payment on an annual basis, the Joint Negotiating Committee of USS have decided that further research is necessary to determine if this can work within the context of USS. For the time being therefore USS members will not be permitted to take their money purchase AVC benefits before their main scheme benefits.

Report by the actuary on the actuarial valuation of USS as at 31 March 1999

The Council give notice that the report by the actuary on the actuarial valuation as at 31 March 1999 is now available.

The results of the valuation may be summarized as follows:

1.	The employers' contribution rate is maintained at 14% of annual salary.
2.	The overall past service surplus of £1,442.8m represents 8.3% of the past service liabilities of the scheme. There is a surplus of £76.2m attributable to the Supplementary Section leaving a past service surplus of £1,366.6m in the Main Section.
3.	The institution contribution rate required for future service alone is 16.3% of salaries.
4.	To fund the reduction of 2.3% below the institution contribution rate of 16.3% of salaries for the next eleven years will require the use of £561.3m of the Main Section surplus. This period of eleven years is the average outstanding working lifetime of the current members.
5.	It has also been agreed that £201.1m of the surplus will be used to fund the following improvements in benefits:

	(i)	Removal of young spouses' reductions
	(ii)	1% special increase in pensions to all non-active members
	(iii)	Increase in lump sum death benefit from 2.5 to 3 times salary.

6.	A past service surplus of £606.4m will be carried forward in the Main Section together with £74.1m in the Supplementary Section, i.e. a total past service surplus of £680.5m will be carried forward.
7.	The contribution rate will be subject to review at the next actuarial valuation, which would normally take place at 31 March 2002.

Full details of the amendment and copies of the report of the actuary can be obtained from Mrs S.E. Curryer, Head of Pensions Administration, Finance Division, 10 Peas Hill, Cambridge, CB2 3PN, tel. (3)32214.

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