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2. Background

2.1 The University’s pension schemes are a critical element of the reward offering allowing the University to attract and retain the most talented employees from around the world.

2.2 Changes to pension taxation have meant that pension benefits earned in a single year or over a working lifetime that exceed the Annual Allowance or Lifetime Allowance, can lead to excess tax charges. These charges can make pension benefits a potentially unattractive means of attracting and retaining staff. 

The USS has introduced various voluntary amendments to help affected members address the high tax charges on benefits, including an “Enhanced Opt Out” (EOO) and a “Voluntary Salary Cap” (VSC) (https://www.uss.co.uk/members/members-home/tax-considerations).

2.3 These amendments have given added flexibility for employees to remain in the USS in some form and to reduce potential tax charges.  However, each involves a reduction in the level of pension accrual without any alternative form of reward.

2.4 To address this issue the University has introduced a supplement that is paid in place of pension contributions for those affected by the pension tax allowances.