Employers in the scheme include all pre-92 and some post-92 universities. Once an employer has signed up, they are bound to stay in the scheme unless they pay a very large sum. Exiting would cost Oxford £2.7 billion.
USS is known as a multi-employer hybrid scheme, offering a mix of defined benefits (DB) for employees below the salary threshold of £58,500, and defined contributions (DC) for employees above the threshold. For those employees receiving defined benefits, these benefits build up independently of the contributions paid and investment returns from the scheme. Most commonly, the benefits are related to members' earnings each year and number of years in the scheme. For those receiving defined contributions, benefits are accrued according to the value of their pension fund at retirement based on the amount paid in and the investment returns.
Employers participating in the scheme have agreed to the ‘exclusivity’ rule, which prevents them from offering or endorsing any other pension scheme. USS is also known as a ‘last man standing’ scheme, which means that when one employer leaves, a money which it owed passes to the others.
Every three years, the pension scheme is legally required to be valued. This means assessing the worth of the scheme, its likely future growth, and the future pensions that it must pay out. Any benefit changes following the valuation outcome must be agreed by a Joint Negotiating Committee (JNC), which includes five representatives of employers, five representatives of employees, and an independent chairman. The employers are represented by Universities UK (UUK) and the employees are represented by the University and College Union (UCU).
USS is an independent fund whose trustees have statutory responsibilities and must act in accordance with the scheme’s rules. So regardless of the JNC’s discussions, the fund can ultimately decide that the pension is in deficit and require the employers and scheme’s members to make more contributions.