Proposed Merger of OUSS with USS

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Proposed Merger of OUSS with USS

• Miles Hedges
• Finance Director

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Agenda

• Reasons for the proposal
• Process
• Timescales
• Comparison of the two schemes
• What happens next?
• Your questions

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Reasons for the Proposal

• Benefits for staff
• Benefits for the University
• Cost to the University

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Benefits for Staff

• One scheme for everyone
• Eliminates the promotion problem
• Allows staff greater mobility between
  universities
• Provides security of a national pension scheme

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Benefits to the University

• Greater stability of its future pension
  contributions
• Greater stability of its reported pension costs
• Remove administrative burden of dealing with more
  than one pension scheme

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Cost to the University

• The University is willing to pay a premium in
  order to achieve the benefits for staff and
  itself
• There is a limit to the amount of the premium
  that can be afforded

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Process

• A long and complex process, involving
• The University Council merger approved in
  principle up to a given financial cost
• USS Trustees the merger process and template
  has already been approved in principle
• OUSS Trustees have to be satisfied that the
  merger is in the best interests of members
• OUSS Members have to be satisfied that the
  merger is in their best interests

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Process

• Discuss proposals with trade unions
• Put project team in place
• Inform staff including this meeting
• Negotiate terms with USS
• Take legal advice both University and OUSS
  Trustees
• Take actuarial advice
• This is a long and complex process

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Timescales

• Sep 2003 Council decision in principle
• Oct 2003 commenced discussions with trade
  unions
• Nov 2003 project team formed letter to all
  staff in OUSS
• Dec 2003 open meeting for all staff
  discussions with USS
• Jan 2004 continued consultation with staff
• Mar 2004 target date to agree principles of
  merger
• Jul 2004 target date to complete merger if
  terms and financial conditions are right

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Comparison of the two schemes

• USS
• National scheme
• Security based on HE sector as a whole
• Retirement age 65
• Option to retire from active service at 60

• OUSS
• Local scheme
• Security depends on a single employer
• Retirement age 65
• Option to retire from 60

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Comparison of the two schemes

• USS
• Pension 1/80th of salary for each year of
  service PLUS
• Lump sum of 3/80th of salary for each year of
  service
• Can convert lump sum into pension

• OUSS
• Pension 1/60th of salary for each year of
  service
• Can convert pension into lump sum up to Inland
  Revenue limit

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Comparison of the two schemes

• USS
• Dependents pension 1/160th for each year of
  service
• Lump sum death in service benefit 3 x salary
• Ill health pension full service to normal
  retirement date

• OUSS
• Dependents pension 1/120th for each year of
  service
• Lump sum death in service benefit 2 x salary
  refund of contribns
• Ill health pension service to date 5 years

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Comparison of the two schemes

• USS
• Employees contribution 6.35 less tax relief
• Maximum pension increase RPI increase

• OUSS
• Employees contribution 6.00 less tax relief
• Maximum pension increase RPI up to a maximum of
  5 in any one year

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Comparison of the two schemes

• Merger is the last stage in a long process
• Many changes have been made in the past to bring
  benefits together generally these involved
  increasing OUSS benefits but not always
• Remaining changes involve some measure of
  trade-off in the same way as buying an
  insurance policy buys peace of mind if things go
  against you

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What happens next?

• Communication plan
• Letter to you
• Todays meeting
• Your questions and our responses
• Regular progress reports
• Key dates
• March agree merger principle
• August start of your USS membership

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Your Questions

• To the panel now Philip Marsh, Joe Devlin
  Miles Hedges
• Information and questions and their responses
  will be posted on Personnel intranet
• Email to pensions-merger_at_open.ac.uk
• To your trade union representatives