Poison bomb waiting for existing USS members
It came to light at a national UCU pension briefing on 6 September that existing USS pension members could potentially have their contributions after April 2011 “poisoned”.
We know already that, in the new scheme, if an existing member takes a greater than 6 month break in service, on rejoining USS they would be counted as a new member and go into CARE (that is ‘Career Average Revalued Earnings’, not a nursing home). Now we discover there is another bomb shell, for those who leave the scheme for greater than one month will become “deferred”.
Deferred members will have their contributions locked to their salary at that time (with the past 13 years earnings considered). However, the inflationary increase on these contributions will be “poisoned”: that is, not only will the CPI be used to index link your pension (imposed by government) but more disastrously this will be capped at 2.5 % (proposed by management).
So if you think that you are safe and need not worry because you are already in the USS scheme and your final salary pension is protected, it is time to consider how the protection is very limited and how a very short break later in your career would “poison” your post-April 2011 contributions, especially if we have a period of high inflation when investments (one would assume the USS investment pot too) would be doing extremely well.