Sheffield's USPS Pension Scheme

Friday 10th December 2011.

You may be aware that the University of Sheffield wants to abolish its final salary USPS scheme, mainly used by grades 1-5, and institute a ‘cash balance’ scheme.  This loads virtually all the long term risk onto staff members, with any high inflation slashing the eventual payout.  Some points which may be of interest:

• Currently only just over a quarter of eligible staff (grades 1-5) are in the current scheme as it is ‘opt-in’, unlike USS (grades 6+) which you are enrolled in by default.  USPS will change to being ‘enrolled by default’ in future, due to legislation.
• If all eligible staff joined the current (final salary) USPS scheme it would cost the University an additional £1.8M pa. This is about 0.5% of turnover, or roughly the salaries of the people sitting on UEB.
• The University paid no money into the USPS scheme for two periods between 1989 and 2000, totalling about 8 years.  The scheme is now underfunded and the University is obliged to make up the gap.
• The University has given the minimum notice for the proposed changes and legal minimum consultation period, and got information to scheme members on the last possible day.  They have only added one week to the 60 day minimum period because of the Christmas closure, which avoids any possible legal challenge.
• If any major changes were made to the proposals there would have to be a further 60 day period of consultation, by law. The University insists the consultation is genuine but it plans to implement the changes in April, and therefore in fact plans to make no major changes in response to the consultation.
• There is a 2.5% pa cap on growth of each individuals ‘pension pot’ in the new proposals.  If the actual growth of funds were greater than this, and long term that is almost certain, there would be a fund surplus. It would be possible to then increase the cap.  However as noted above the last time this happened the University chose to pocket the surplus.
• About 300 staff in grades 6 and above are in USPS, having chosen to stay in when promoted. It may well be possible for them to transfer benefits to USS if the University implements major changes.

None of the staff unions believe the proposals are acceptable.  All believe there should be meaningful negotiations between management and unions, with radically different proposals being then put out for consultation.