Trustees of the Universities Superannuation Scheme, London, are consulting on newly proposed funding assumptions and methodology in respect to the 2023 actuarial valuation that would lead to a change in contribution rate of the largest U.K. pension fund, which is now expected to be in surplus.
The fund had £90.8 billion ($119.2 billion) in assets at the end of March 2022.
Following the expected 2023 valuation of the funding position, the trustees proposed that a future service contribution rate of 16.2% for the current benefits compared with 25.2% at the 2020 valuation, reflecting significant changes in the economy due to an increase in interest rates in the last months, USS said on its website Wednesday.
The plan is in a potential surplus of £7.4 billion on the technical provisions basis as result compared to a £14.1 billion deficit in 2020.
Plan participants currently pay 9.8% of salary, while employers contribute 21.6%. The current rate was designed to cover deficit recovery contributions on top of the 25.2% future service rate.
"Having wrestled with deficits and rising contribution rates for more than 12 years, UCU (University and College Union) and UUK (Universities U.K.) now find themselves in the very welcome territory of considering how to respond to very different circumstances," Kate Barker, chairwoman of the USS board, said in a news release.
"The emergence of a provisional surplus could provide a platform for greater stability in terms of the scheme's funding position, contribution rates and benefit structure — and we look forward to supporting UCU and UUK's discussions on this," she added.
Reacting to the news, UCU general secretary Jo Grady said: "This is yet another step towards the restoration of our members pensions. I have lost count of the times we were told it would never happen, we were often mocked by pensions 'experts' who maintained that our campaign and actions were pointless. This is a lesson, not only to UCU members, but workers in general — if you are prepared to fight for something then there is always a chance."