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The distribution of loss to future USS pensions due to the UUK cuts of April 2022

Author

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  • Jackie Grant
  • Mark Hindmarsh
  • Sergey E. Koposov

Abstract

We present the first global analysis of the impact of the April 2022 cuts to the future pensions of members of the Universities Superannuation Scheme. For the 196,000 active members, if Consumer Price Inflation (CPI) remains at its historic average of 2.5%, the distribution of the range of cuts peaks between 30%-35%. This peak increases to 40%-45% cuts if CPI averages 3.0%. The global loss across current USS scheme members, in today's money, is calculated to be 16-18 billion GBP, with most of the 71,000 staff under the age of 40 losing between 100k-200k GBP each, for CPI averaging 2.5%-3.0%. A repeated claim made during the formal consultation by the body representing university management (Universities UK) that those earning under 40k GBP would receive a "headline" cut of 12% to their future pension is shown to be a serious underestimate for realistic CPI projections.

Suggested Citation

  • Jackie Grant & Mark Hindmarsh & Sergey E. Koposov, 2022. "The distribution of loss to future USS pensions due to the UUK cuts of April 2022," Papers 2206.06201, arXiv.org.
    • Handle: RePEc:arx:papers:2206.06201
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    References listed on IDEAS

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    1. Platanakis, Emmanouil & Sutcliffe, Charles, 2016. "Pension scheme redesign and wealth redistribution between the members and sponsor: The USS rule change in October 2011," Insurance: Mathematics and Economics, Elsevier, vol. 69(C), pages 14-28.
    2. Charles R. Harris & K. Jarrod Millman & Stéfan J. Walt & Ralf Gommers & Pauli Virtanen & David Cournapeau & Eric Wieser & Julian Taylor & Sebastian Berg & Nathaniel J. Smith & Robert Kern & Matti Picu, 2020. "Array programming with NumPy," Nature, Nature, vol. 585(7825), pages 357-362, September.
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    Cited by:

    1. Jackie Grant, 2024. "The UK Universities Superannuation Scheme valuations 2014-2023: gilt yield dependence, self-sufficiency and metrics," Papers 2403.08811, arXiv.org, revised Apr 2024.

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