Published: 19th July, 2019
You will have no doubt read with interest the Acting Vice Chancellor’s letter of last week regarding the on-going USS pension dispute. Here I want to unpack some of that, challenge some of the analysis, and outline what we as a branch would like to see the university do in order to ensure that the USS scheme is managed in a way acceptable to its members.
Central to the dispute over USS is the valuation of the scheme’s assets and liabilities. On a rolling programme, USS establishes if the scheme is in surplus or deficit and adjusts contributions to reflect that. However, there is no fixed valuation methodology and, within reason, the scheme’s trustees can adopt many different ways of assessing the scheme’s assets and liabilities and, therefore, future costs.
When strike action was called off in 2018, a Joint Expert Panel (JEP), comprising representatives of UCU and the employers and with an independent chair, was established to look at how the scheme operated. In its first report, it made seven recommendations, both the employers and the union accepted these recommendations and asked the USS trustees to implement them.
One of the JEP proposals was a new methodology with which to value the scheme’s assets and liabilities. If employed, this new methodology would arrive at a valuation that would establish that payments to the scheme can continue at 26% of salary, split between employers and employees. USS’s trustees refused to implement this new methodology.
We see no reason as to why the valuation methodology proposed by the JEP cannot be implemented as agreed by both sides in the dispute. The AVC claims that the Pensions Regulator would not accept the proposed JEP valuation methodology. But the truth is that USS did not even try to persuade the Regulator to accept it – despite the Regulator saying that it was open to being persuaded.
We call upon the university to publicly demand the implementation of the JEP in full.
Because USS has refused to change its valuation methodology it is able to claim that the scheme is now in deficit and requires additional contributions. Your contributions, and those of the employers, increased in April of this year. USS has proposed that they increase in October and, most likely, again in two years’ time at which stage contribution rates will go above 34% of salary.
Our employers are arguing that the threat of an increase to 34% of salary is a chimera because, so the line goes, the second JEP report, which is due to be published later this year, will contain recommendations that will alter the scheme’s valuation and governance and thus avert the proposed future increases.
At this stage we have no faith that the USS trustees will implement this second JEP report given its refusal to implement fully the first. We are not prepared to commit on trust to further increases in contributions, therefore. If our employers are, then we call for them to shoulder 100% of the interim increases in contributions until the JEP’s proposals are properly implemented.
The ‘no detriment’ motion which the UCU Congress passed earlier this year called upon employers to shoulder the proposed increases in contributions to the scheme occasioned by the refusal to implement the JEP. Our members lost a considerable amount of money prosecuting a fourteen day strike against proposed changes to our pensions, changes which our employers ultimately conceded were, far from being essential, unnecessary. We have already shouldered further increases to our contributions to the scheme, despite the proposed JEP valuation being accepted by the union and employers. We see no reason for members to suffer further increases when a way forward has already been found. The no detriment proposal refers specifically to the proposed increases that are forthcoming as a result of the failure to implement the JEP. UCU is not, in normal times, calling for there to be no further increases in contributions or a change in how those contributions are divided between employers and employees. We are calling for those increases to be arrived at through a fair methodology.
We call upon the university to stop peddling the myth that UCU is proposing to walk away from the 65/35% default cost sharing agreement on pensions contributions.
Should members have questions or comments in relation to the dispute, please do feel free to contact the UCU Leicester Pensions Officer, Dr. Chris Grocott (email@example.com).