Dundee Discussion Papers in Economics 261: Some implications of capping the inflation indexation of USS pensions

On 1 October 2011 the Universities Superannuation Scheme (USS) substantially reduced the pension entitlements of its members. The most onerous of the changes is the cap placed on the indexation of pensions where in the event of high inflation the cap will quickly lower the real value of the
pension. This paper quantifies the impact of the inflation cap and high inflation on the real value of the member’s pension and the concomitant impact on the USS and universities.