June 2019 USS Update

Want to contribute to the ongoing UCU campaign over USS, but don’t have very much time? Here is a short to do list:

1. Read this email to catch yourself up on the latest news, or if you prefer an auditory version, watch this talk given by our branch president Sam Marsh yesterday at the Open University.

2. Sign this petition, which calls for Trinity College, Cambridge, to reverse their decision to withdraw from the USS scheme (more details on this below).

3. (A larger time commitment item): We are in need of a new Pensions Officer and a new member of the University’s USS Working Group to replace Jo Grady, the new General Secretary of UCU. Please email us if you are interested.

A new USS ballot

At the end of May, UCU’s Higher Education conference (which was held on the second day of Congress 2019) voted overwhelmingly to ramp up preparations for an industrial action ballot over USS to begin in September. And as of 7 June, employers have been served a letter inviting them to take steps to avoid a re-ignition of the dispute.

Why has UCU decided to ballot? When the Joint Expert Panel’s first report dropped in September, there was hope from all sides that it had the potential to end the dispute. Adopting its recommendations would mean a shift in philosophy from USS and rate increases low enough to negotiate over. Both UCU and Universities UK backed the JEP report, the latter with the strikes still fresh in the mind and eager to put the dispute to bed. The issue, as was always likely to be the case, has been with USS’ response.

A USS timeline from September 2018-now

The first side-step by USS was their proposal for a new, 2018 valuation as a way to incorporate the issues raised by the JEP. This would not replace the 2017 one, but instead follow close on its heels and intercept the large contribution increases that were a consequence of the original valuation. Support for this approach was secured from the employers, and the Joint Negotiating Committee were shown information that if the JEP’s recommendations were applied in full to the 2018 valuation, it would mean that the deficit would vanish and that contributions would fall (although no guarantees were made as to what the final figures would be).

As soon as agreement to proceed with a 2018 valuation was sealed, the USS executive team contacted the board and recommended dropping two of the three key proposals from the JEP report, while the only one that remained would be inextricably tied to ‘contingent contributions’ from employers. The justification for USS’s rejection of the JEP’s recommendations was that adopting them would send the ‘discount rate’ above the internal benchmarks the regulator uses to judge a valuation’s prudence. Yet these internal benchmarks don’t exist! The regulator has made this explicit via a cryptic stab at USS in its annual DB funding report. It is possible – indeed likely – that this was not the first that USS had heard of this issue from TPR. If true, USS’ public statements to the contrary are all the more disingenuous.

This leads to where we are now: USS has rejected both the JEP report and the overwhelming evidence that their methodology is flawed, and is still relying on Test 1. Nothing has changed in their mindset or approach. Based on this, they insist the correct contribution rate is 33.7% of pay, an increase of 7.7% since before the dispute. There are attempts by USS to mask the situation by offering two other ‘options’, but these options are either highly unpalatable (trigger contributions which are more likely than not to set off) or disingenuous (even in the eyes of the regulator).

The University of Sheffield has published its response: it is not prepared to play the game and pick an option. This is not surprising. Employers and members alike both look on aghast at the mess that has developed for no clear reason. Added to this, Prof Jane Hutton, one of three UCU-nominated trustees, has recused herself from the board under “considerable pressure” after whistleblowing to the regulator on the obstruction she faced obtaining data on the valuation. This has now led to over 1,000 academics signing a petition to call for an inquiry into the scheme. There are serious issues here that need proper answers, and we suspect that we will continue to hear more about USS governance in the days to come.

The Academics for Pensions Justice group are preparing a legal challenge to USS to add to the mix. Their work now has the support of UCU, due to the motion sent to conference by Sheffield UCU, and given more teeth by an excellent amendment from Leeds UCU.

A further wrinkle in all of this is that Trinity College has announced their intention to leave the USS pension scheme, despite themselves acknowledging that it is a healthy scheme that poses essentially no risk to their endowment. While Trinity’s withdrawal does not put the scheme at immediate risk, we are very aware of the possibility that USS will use it as a rationale for further changes or attacks on our pensions. Additionally, we view this action by the Trinity College Council and Fellows as a betrayal of the collective HE community, which fundamentally relies on cross-institutional collaboration in all areas of education, including our working conditions and benefits. It is not too late for Trinity College to reverse this decision, and we are in support of this petition that calls for Trinity to do so, and for staff to withdraw their discretionary labour from the College in the meantime.

What now?

So, to return to the initial question: why a ballot? Because this dispute is far from over. Employers are losing faith in how things are being handled by USS yet failing to publicly call out the problems, propping up a malign administration in the process and allowing money to be siphoned out of the sector. Failing to push back now will lead to USS tightening their grip, making it easier for them to shrug off the second report of the JEP. Employers will almost certainly start planning for ways to mitigate a 2020 valuation which shows more of the same. We will face big problems in the future.

What is at stake is the same as ever: the future of the DB scheme. It is tragic that we’re heading back towards a ballot for strike action. But employers know what they need to do to avert it: call out the disastrous internal governance of USS and make sure that there is a major change of direction, or, failing that, pick up the tab for the contribution increases.

We will try our best to keep you informed of developments as they occur, as the situation is currently fast-moving and uncertain.