USS publishes Report and Accounts covering 'an extraordinary year'

• £82.2bn – total value of assets under management
• 9.75% – average per annum investment return for the defined benefit fund, over five years
• £66 million – how much lower USS’s annual investment management costs were than its peers
• £15.2bn – estimated Technical Provisions deficit
• 88% – of employers who rate their relationship with USS as good/very good

Universities Superannuation Scheme has published its annual Report and Accounts, covering the financial year to 31 March 2021.

Investment returns for the scheme’s defined benefit (DB) assets averaged 9.75% pa over the five years to 31 March 2021, helping the DB fund to increase by £30.8bn in that time.

By managing the majority of its investments in-house, USS saves money compared to the expense of external management.

According to the latest independent analysis, USS’s annual investment management costs were £66 million lower than its peers¹.

In June 2020, USS Investment Management announced its first exclusions policy. USS has since stated its ambition for its investments to be net zero by 2050, if not before.

At 31 March 2021, total assets under management were £82.2bn (2020: £67.6bn). Its DB fund stood at £80.6bn, while its defined contribution (DC) assets totalled £1.6bn.

Its estimated DB funding deficit stood at £15.2bn on a Technical Provisions basis, based on monitoring of key financial measures since the 2018 valuation (2020: £12.9 billion). The funding ratio on the same basis was static at 84%.

• USS’s membership grew in 2020/21 by more than 15,000, from 459,714 to 476,002 (203,995 active, 194,044 deferred, 77,963 retired).
• All members of USS are part of the scheme’s DB section; around 91,000 members now hold supplementary DC assets with the scheme, which were worth £1.6bn at 31 March 2021 (2020: £1.1bn).

Bill Galvin, USS Group Chief Executive, said: “Through an extraordinary year, we have worked hard to deliver the best outcomes possible for members. Service levels have remained very strong, through all the challenges. Our asset values have grown by £30bn over five years, and our operating model continues to ensure we manage our assets at a cost lower than our peers.

“But the value of the inflation-protected pensions promised to our members has also soared, and so our funding ratio remains static. We’re working exceptionally hard with our stakeholders on the changes required to ensure the scheme’s funding of past promises and future benefits is appropriate and balances the interests of all members.”

Dame Kate Barker, Chair of the USS Board, said: “Despite the strong rebound in financial markets supported by concerted government and central bank actions, we still face major challenges in dealing with the wide‑ranging financial impacts of the Coronavirus pandemic – in addition to the pressures the scheme was already under. Over the coming months we will continue to engage with Universities UK, University and College Union and The Pensions Regulator to find the best way forward.

“Whatever circumstances arise, I am convinced that USS has the leadership, the principles and the professionalism to deliver secure pensions and first-class services to our members.”

View the latest updates on the 2020 valuation.

¹ According to the latest independent analysis by CEM Benchmarking; investment management costs (as a proportion of assets under management) of schemes of a similar size and complexity to USS, covering calendar year 2019

Please note: This article was updated on 29 October 2024 to clarify our net zero ambition and targets.