Active and proportionate revaluation

We wish to draw your attention to the following three recent important updates that USS has placed on its website. These USS updates provide, for the first time, an account of the way that revaluation of member pensions currently operates when they retire or leave the scheme:

• guidance, with examples, on how USS revaluation operates at: How revaluation works while you are an active member
• new information in the PDF: 'A guide for IFAs' at USS page for Financial Advisors
• updated version of the scheme rules to include the retroactive 29th Deed of Amendment: USS Scheme Rules.

We want to provide further information about how the choice of leaving date or retirement date can affect pensions under the current USS revaluation method. At this stage we are alerting members to these USS updates and how UCU is engaging on these issues on behalf of scheme members. It is particularly important for any member retiring or leaving the scheme in the next 12 months to seek updated information and support from USS and Independent Financial Advice as necessary.

We would also take this opportunity to remind scheme members that there are many factors that can impact on a member's pension - these updates cover one such factor. Members can seek information and support directly from USS on the large range of issues that influence the outcome of their pension at retirement. We also encourage scheme members to access Independent Financial Advice (see below).

Background

In summer 2024 UCU was made aware that a scheme member had lodged a detailed complaint about the way CPI revaluation had been applied to their pension on leaving the scheme and that they considered they had consequently suffered a significant and unforeseeable detriment to their pension.

USS investigated this complaint and found that the revaluation that had been applied was in breach of the Scheme Rules. In the view of the Trustee this breach left the Trustee and members at risk. To mitigate that risk, USS sought the consent of the JNC to amend the Rules to retrospectively align them to the operational practice USS believed was the intention of the JNC at the time. This would ensure that overpayments would not have to be recouped from members as would be the case if the scheme rules were applied.

UCU engagement

UCU has had considerable engagement on this issue. Through our Superannuation Working Group (SWG), we raised concerns on this issue last year and have been actively engaged with USS since January 2025. UCU had sought an outcome to this complex matter whereby no scheme member would suffer from either:

1. recovery of overpayments and reductions going forward or
2. any potential loss relative to what we believe they are due: namely no less than a revaluation each April based on the previous September's annual rate of CPI (subject to caps in some cases).

While we recognise that the first of these aims has been achieved by the retroactive amendment to the rules, the second, which is particularly sensitive to swings in CPI, is still under consideration and we are engaged with USS and UCEA on this.

USS and the JNC

UCU engaged through the JNC taking financial advice from our scheme actuary and legal advice from King's Counsel to ensure that members did not suffer a detriment or any unintended consequences. As noted above, USS had taken a view on what the JNC's intention was regarding changes to the scheme in 2011 and 2016 while UCU had expressed a different view.

Following extensive engagement between UCU, UCEA and USS, the USS Trustee had been keen to apply the rule changes as quickly as possible to avoid potential overpayments but UCU requested additional time to carefully consider other aspects of this matter. In May 2025, proposed changes to the scheme rules were presented to JNC as the 29th Deed of Amendment, for consent via a vote.

UCU voted against passing the 29th Deed but we were not supported, so the Deed was passed subject to Rule 64.7.4 (Chair's casting vote when votes are tied).

This was very disappointing and was a decision we believe that could have avoided, ie use of the Chair's casting vote. However, now that the 29th Deed has been implemented, we are communicating with members to set out both the background and also how we are moving matters forward.

Changes to the rules

UCU believes that further changes need to be considered to provide members with the revaluation we believe they are due. UCU also believes that clearer and more timely communications of the current method of revaluation are needed, so members are adequately informed of how leaving or retiring on one day rather than the next can increase or decrease your pension. Members also need to know how the Scheme Rules have been amended to reflect this operational practice.

USS has posted new guidance - How revaluation works while you are an active member - which attempts, for the first time, to explain how revaluation applies to the vast majority of members who retire or defer on a date other than 31 March. The explanation they provide has been challenging even for experts to follow. We regret that the scheme has a method of revaluation that is so complicated that most members will need to take financial advice simply to understand the unanticipated costs and benefits of deferring or retiring at one point rather than any other during the year. If members seek independent financial advice, please make sure to bring the most recent USS IFA (USS page for Financial Advisors) guidance to the attention of that adviser along with the updated USS Scheme Rules.

While Revaluation is only one of a number of factors that members must consider when deciding to leave or retire, doing so one day later or earlier than planned could increase or decrease your pension under the current method of revaluation. So we would encourage all UCU members to take advice when they get to the stage when they are considering retiring or leaving the scheme. As a reminder, UCU has a partnership arrangement with Quilter Financial and you can get further information on this at UCU - Financial advice from Quilter Financial Advisers.

Next steps

UCU is continuing to engage with the USS Trustee to improve communications on this issue and we will work with UCEA & USS to formally review all aspects of revaluation. For SWG, this review will include full CPI indexation (with soft-cap where applicable) for all Final Salary benefits and removal of the 12-month lag that means members have to wait a year or more to get their first inflationary increase on a new 12-month block of pension. We will be in touch further on this review and these negotiations in due course.

This matter is very complicated but vitally important and so it is critical that any active scheme member considering leaving the scheme or retiring both makes full use of USS information available on Benefit Calculations including the range of factors that impact pension at retirement and takes independent expert financial advice before agreeing a date for deferring or date of retirement. The future rate of pension will depend on scheme members making the right decision depending on their circumstances at that time and independent financial advice is crucial to informing this.

Dooley Harte
UCU pensions official (USS)