LUCU Update on USS Pensions
University staff will have received the recent communication from Chris Linton concerning proposed changes to the USS pension scheme. As Chris explains, the proposed changes have come about because USS continues to adopt excessively prudent assumptions when valuing the scheme. In particular, USS’s assumptions about asset growth are absurdly pessimistic. In the period since the valuation date (March 2020), the scheme’s assets have grown by £19.7bn. In contrast, the assumptions in the valuation suggest that this level of growth would not have been achieved until 2110. After just one year the scheme is a full 90 years ahead of schedule!
Unfortunately, our employers have decided to push the cost of this flawed valuation onto staff. While it is true that employers have agreed to increase the level of so-called covenant support, the cost of this is at best highly speculative, that is, of the form “borrowing might cost the University a bit more in a few years”. In contrast, we are being asked to accept cuts of between 20% and 35% of our pension now. You can find out exactly how much you are being asked to sacrifice by using the USS modeller: http://ucu.org.uk/ussmodeller
We would like to address one specific section of Chris’s email in some detail. He writes that UCU developed some alternative proposals, but that these were not “formally submitted to the [Joint Negotiating Committee] for determination”. Precise, and in our view eccentric, meanings for the words “formally” and “determination” are required for this sentence to be true.
In collaboration with branch pension officers, including Loughborough’s, UCU developed a set of proposals (which can be seen in this news article). These involved sharing the costs of the flawed valuation between employers and employees. The idea was that members might be willing to accept a short-term price to avoid industrial action, so that UCU could join forces with UUK and push USS into governance reform that would permit a sensible valuation to be conducted in 2022. UCU’s proposals were submitted to the Joint Negotiating Committee (as item 3.2 in the papers for the meeting of 13th August). Unfortunately, UUK decided that they were not able to consult with employers about the proposals during August, apparently because too many people were on holiday. As a result, UUK decided that they could not provide covenant support to any proposals that were not their own. Because no occupational pension scheme can operate if employers refuse to support it, this meant that UCU’s proposals could not be put to the vote in the JNC meeting on 31st August. In short, UUK vetoed them. Notwithstanding this, Loughborough UCU has asked Loughborough University to review the UCU proposals directly. We are pleased that the University has agreed to look at them in detail, to understand them and to comment on them.
There is still time to resolve this dispute without industrial action. UUK could choose to withdraw their proposals and engage in good-faith discussions with UCU about solutions to both the short-term and long-term issues that USS’s behaviour has raised.
Unfortunately, this looks unlikely. As a result, last week UCU’s Special Higher Education Sector Conference agreed to launch an industrial action ballot.
We have called a meeting of all members to discuss the USS situation on 8th October at 1pm, and further details will be circulated in due course.