All that way for this?

In a previous post I showed how to calculate the cost of making up the loss of benefits under the proposed changes to USS using HMRC's method for valuing contributions to a defined benefit pension scheme. For those calculations I covered salaries up to the current salary "cap" of £55,500. In this post, I extend the calculation to cover colleagues whose salaries exceed the cap, right the way up to VC or Principal levels showing that the proposed changes are actually neutral for salaries around £250,000! Above the salary cap, employers currently pay 12% in defined contributions while members pay 8%. Under the proposed changes, the member contribution will remain the same while the the employer contribution will rise to almost 13.25%. Contrast this system with e.g. the NHS pension scheme where the ability to pay for benefits is factored in and the higher salaried members pay up to around 15%. The effect of the different contribution rates can be seen in Figure 1. Above the