UUK Consultation on USS Governance Change

UUK have consulted Universities about a proposed review of USS’ governance structures, although its proposed terms are highly UUK-centric. We discussed these at a USS sub-JSNCC earlier in the week, where management asked Unions (although I was the only Union member there) to feed back. Documents can be found here: USS-subJSNCC 2022_8 Minutes 5 April 22 FINAL.pdf and USS-subJSNCC 2022_9 Governance review of USS – UUK consultation on the planned approach – July 2022.pdf

The points made during the meeting summarised as follows:

  • Must be an equal partnership between UUK and UCU in the leading of this review. Concern with an independent chair would be that they may “side” with UUK;
  • Need to review the process for the appointment and accountability of trustees; in particular how the independent directors are appointed and how members can hold directors to account on their performance. Note that the Pensions Act requires 1/3 of DB Trustees to be member-nominated.
  • Suggestion to replace stage 1 of the review with a commissioning of a separate report – this will enable stage 2 to proceed more quickly.
  • Should there be a separate “lessons learned” on what has gone wrong with USS?
  • Status of the JEP – Question whether there is an obligation on the Trustees to follow these recommendations (we discussed this and unlikely but might be worth noting).

We decided that I would provided written suggestions to the Uni’s response, following consultation with UCU pensions reps, in addition to those in the meeting. I consulted reps. and just sent the following email:

— 
Dear Gordon,

Thanks for the chase. A few additions for you to consider in response, sourced from discussions amongst national UCU pensions reps, so they will broadly represent the UCU national position.

  • Following our discussion of independent governance expert or no, the feeling is that the suggestion to get external governance experts involved is sensible. This is a really technical area of law, and regulation, and any proposals for reform are more likely to be credible if they’re produced by professionals. There is still a concern that independent experts might side with UUK’s stated position regarding pension plans, however this ought to be controlled for by joint UUK/UCU appointment of the reviewers/chair.
  • The idea of a ‘lessons learned’ stage is good, though this could be published after the publication of the initial report so as not to obstruct the necessary changes suggested in it.

 

2. Are there aspects of the review which need to be included, or removed, or further emphasised?

  • The current purpose of USS and objects of the company that acts as Trustee (USS Limited – USSL), are good, essentially – act as trustee for the benefit of relevant university staff. These should not be changed and probably should be out of scope for review. 
  • The appointment and removal of USSL directors is critical. The review should consider whether the independent directors should be member elected, or whether the independent directors should be replaced with UCU/UUK appointed directors (note RPS has 50:50 union employer appointed directors). 
  • The review should consider UUK’s role in USS governance. UUK is all HE in the UK, whereas USS is a subset. It’s also not entirely clear how the responses of institutions get translated into UUK formal responses. 
  • The review should include accountability and oversight of USSIM.

 

6. Do you believe there are weaknesses in USS governance, and if you do which do you believe are the problem areas, and why?

  • The decision to remove UUK and UCU’s right to recall their directors in 2018 should be revisited, as this weakened governance. 
  • Currently, the only people who have rights as members of USSL are the directors who run the scheme. The review should consider whether membership of USSL should be broadened to include ordinary scheme members and employers, or whether the scheme rules should be amended to give ordinary scheme members or employers the same rights as members of USSL. 
  • The directors are currently not representative of the scheme membership in terms of gender, age, or ethnicity. Directors from the financial industry are wildly overrepresented, this should be improved.
  • A number of directors have conflicts of interests as VCs, this is akin to having CEOs on the board of a pension scheme, which is generally considered to be unwise.

 

7. What would ‘better’ look like to you in terms of USS governance (please be as specific as possible)?

  • Consideration should be given to allowing ordinary members to elect the independent directors or replacing most or all of the independent directors with member and employer-nominated directors. 
  • Membership of USSL be expanded to include ordinary members and employers 
  • Restoring the right to recall directors. 
  • Splitting the DB/DC schemes into two entirely separate organisations, with separate governance structures.
  • A transparent and accountable valuation process, based on clear and credible evidence.

Thanks again for your engagement with this: management’s consideration of UCU’s position locally is much appreciated and we would be in a much better position if UUK did so with the UCU nationally.

— 

I imagine this will be the last thing I do for the branch in terms of USS. I strongly encourage whoever takes on the role of unofficial pensions rep. to push firmly and constructively at management: they have taken on board a large number of suggestions to their messaging with UUK as a result of discussions over the last two years, demonstrating that we can have impact over Kent’s voice in UUK. As Cox is now on the UUK board, I think this will be only more significant from now on.

Best wishes,

Chris

USS Comparative Decrease Graph

Jackie Grant, a UCU pension rep. at Sussex, prepared the following graph, which comparatively outlines how pensions are likely to depreciate given the recent cuts pushed through at JNC. The graph highlights just how poor our pensions now prepare us for living in our old age, and how urgent changes to USS governance and valuation policy are.

Graph showing comparative USS pension decrease

USS: 0% contribution increases needed to service deficit!

I have just sent the following letter to Martin Atkinson and Jane Higham in the hope that we can push back against the continuing farce that is the #USSmess.

Chris

Continue reading

USS + Legal Challenge Update

Dear colleagues,

I am writing with an update on the USS pension situation. This will be fairly long so, if you don’t want to read it now, please bear in mind that we periodically update the branch blog with these updates, as well as various bits of news that do not go out through UCU-announce.

Recent USS Activity

On 22nd January, UCU released an alternative proposal for our pensions to that the UUK had previously tabled. The proposals, which the USS Trustees verified as costed and implementable (and here), were as follows:

  1. That UUK call on USS to issue a moderately prudent, evidence-based valuation of the financial health of the scheme as at 31 March 2022, to be issued for consultation in June (at the latest);
  2. That employers agree to provide the same level of covenant support as for their own proposals to facilitate a cost-sharing of current benefits throughout the 2022/23 scheme year, starting 1 April 2022 at 11% member/23.7% employer until 1 October 2022, and 11.8%/25.2% thereafter;
  3. That employers agree to pay a maximum 25.2% and members a maximum of 9.8% from 1 April 2023 so as to secure current benefits or, if not possible, the best achievable as a result of the call on USS to issue a moderately prudent, evidence-based valuation.

Mike Otsuka, a UCU USS negotiator, wrote a blog post that outlines the logic behind these proposals. In short, Otsuka recognises members’ preference for keeping USS benefits even at the cost of a modest increase to contributions in line with the current valuation.

On 9th January, I wrote a letter to Martin Atkinson (UCU Letter re. USS 9.2.22) encouraging the EG to support the UCU proposals. I acknowledged that he and Karen Cox would like to see a change of Trustees before a new valuation is carried out and that we agree that a change of the Trustee’s makeup is needed as a matter of urgency. Nevertheless, I argued that we had no more time to wait before the UUK’s damaging proposals would be implemented – University management’s imminent support for the UCU’s proposals was crucial.

EG’s Response

Nevertheless, EG refused to support the UCU’s position and voted in favour of UUK’s damaging and needless cuts (Proposed Consultation Response – UCU proposal feb22-1). The letter contains four justifications for rejecting the UCU position, none of which should be accepted:

1. ‘any further increases to the UUK modified proposal contribution rate of 21.6%, even to a capped rate of 25.2%, would require staff cost reductions to be made elsewhere. We strongly fear that this could impact on jobs and our ability to make pay awards, thus adversely impacting staff workload, staff morale and the student experience.’

As if staff workload, staff moral and the student experience are not already being effected by the calamitous financial situation that EG have allowed to perpetuate at the University, management clearly do not appreciate that a ~35% decrease in our pensions might in itself lead to further ‘adverse impact’. UCU negotiators have already identified that the University made £4 million in advanced savings that were given directly to our creditors. Perhaps, if EG were seriously concerned about workload, morale and the student experience, it might have put this money into a pot to pay the increased contributions that the UCU proposals would have required until the next valuation.

2. ‘such contribution increases for members would be both unpalatable and, in some cases, simply unaffordable – this is therefore likely to lead to an increased opt out / withdrawal from the scheme’

The survey EG conducted before responding to the UUK consultation confirmed that there were more staff who were prepared to take the increased burden of contributions in order to maintain their pensions than not.

3. ‘In the event that either a March 2022 valuation could not be conducted in time or that this concluded a worse or less positive outcome than is currently assumed within this proposal, the further increases in contributions that could apply would be even more damaging’.

This is a reasonable objection only whilst University managements refuse to support UCU’s proposals. UCU has, however, been pushing for a revised valuation against UUK who are the body holding things up. Furthermore, the separate legal challenges being mounted by both UCU and two of its members would ensure that a reasonably prudent position is adopted by the USS Trustees, ending the farcically pessimistic cycle of valuations. I have written before on this blog about prudence in USS, often using Neil Davies’ work as a guide. Sam Marsh has also written on how the USS is actually, in fact, much more healthy than its Trustees, or The Pensions Regulator (TPR), let on.

4. ‘we point to the USS Trustee response to a previous request for a March 2021 valuation, which concluded that the funding position would have worsened due to the Pensions Regulator steer for less-prudent assumptions to be used at this date’.

Neil, above, shows how TPR has likely overstepped its statutory boundaries in pushing for an overly-prudent 2020 valuation and the extent to which this has happened is in the scope of Neil and Ewan’s legal challenge against USS. As I have repeatedly made clear at the USS sub-JSNCCs however, the pension pot is in a far more healthy situation than the USS Trustees have historically admitted. For example, as they recently stated in answer to their member questions, ‘since 31 March 2020 the value of the scheme’s assets has recovered to pre-pandemic levels and, as at February 2022, stood at £88.8bn’:

USS Pension Asset Health

Whilst the health of the pension pot also takes into account liabilities in relation to asset growth, USS has not yet given evidence of the growth of liabilities in relation to assets. There is no evidence to suggest that liabilities have grown to anywhere near enough the levels that might require such high levels of prudence.

USS Decision

You will no doubt by now have read that the UUK’s proposals were voted through at the last JNC and that our pensions will become significantly worse off from 1st April. You can find out how much they will change here. Atkinson’s email (subject: [uss-consultation] Final outcome of the USS 2020 Valuation) is frustrating in its unequivocal support for UUK’s position and suggests that what members might have been subject to (i.e. the increased backstop costs (i.e. increases to 11% in April) were inevitable. They were not, and we should be clear:

The reason why our future pension accrual will be 65% of what it is now is because of political cowardice and financial mismanagement of British Universities at both the national and local levels. Whilst Vice Chancellors around the country scrabble for the chicken feed dropped by the OfS, hopelessly complicit in the neoliberalisation of HE, they have entirely failed to ensure the short- and long-term financial stability of the institutions that they are paid £hundreds of thousands to watch over. Any justification that we must take a ~35% cut to our future remuneration is predicated on their lack of resistance to the Tory’s financialised image of HE.

Where have been the voices of resistance whilst Universities have been gutted by attempts to turn students into consumers? Where has been the commitment to staff wellbeing and remuneration from the managers who often earn 10x the salary of other University workers? Kent management’s decision to support the UUK proposal is just another example of their generalised political cowardice and Cox must account for her silence.

Whatever disagreements we may have with how industrial action and its campaign has been carried out, or over the specific details of the UCU proposals, we must remember that it is they who have catastrophically failed in their responsibilities to guarantee the enduring success of British HE. Given this failure, it is clearly up to us to do so, and so we must galvanise our commitment to the sector we all love. There is still much to fight for: the next valuation round and the Four Fights campaign are very much still live, as is our local dispute to save jobs here at Kent.

Legal Action & What You Can Do

  • On 28th February, Neil Davies’s (Bristol UCU) and Ewan McGaughey’s (KCL UCU) legal action passed its first hearing at the High Court and will get an urgent new hearing on the 28th March.
    • There are four claims:
      1. That the 2020 valuation was flawed and unnecessary
      2. USS costs are excessive
      3. The changes discriminate against women, younger and minority colleagues
      4. The USS has failed to have a credible plan to divest from fossil fuels, and this causes significant financial detriment
    • This is a crowdfunded effort and they rely upon donations from members and branches. I will put forward a motion at the next branch meeting for the branch to make a donation to the fund, however every individual donation will help.
    • Please follow the above link to see how they are suing the USS Trustees in order to reverse the damaging cuts.
    • Please consider donating what you can.
  • Please continue to participate in our local boycott of marking and assessment to save jobs. It is vital that we continue to pressure management and show them how furious we are at their attempts to make their failures our losses.
  • A further five consecutive days of strike action have been called starting on Monday 28 March and continuing until Friday 1 April.
    • These strike dates are for both the Four Fights and USS Campaign – please come out on the pickets and make so much noise that management cannot but hear why you’re there!

USS Pension Update

Local Context

Whilst we were on strike this month, the University of Kent rejected UCU’s proposal to stave off cuts to our pension pay-outs. This is the text of their rejection: Proposed Consultation Response – UCU proposal feb22.pdf

Management’s response is clear: their financial mismanagement has led to the position whereby we must take a ~35% cut to our pensions. Instead of being able to temporarily soak up a small increase in contributions, only for these to undoubtably be lowered after the next valuation, they have instead decided to build more fancy buildings and pay off creditors earlier than needed. We have outlined how we believe management is mismanaging finances in greater detail in this blog post.

National Context

As we have reported in previous branch meetings, there are currently two legal actions being brought against USS: one from UCU HQ itself and another by two UCU pensions reps., Neil Davies of Bristol University and Ewan McGaughey of KCL. UCU HQ have been quiet on their action, no doubt to ensure USS cannot prepare a defence in advance however, on 28th February, the High Court accepted the latter case, which will now be heard in court on 21st March. There are a range of remedies that the claimants could seek from the court, but ultimately these would come down to the judge. Neil and Ewan have said that they intend to right the wrongs we are alleging (e.g. timing of the valuation, implausible valuation assumptions, discrimination, costs, lack of a plan for climate change).

This legal challenge makes up one prong of a three-pronged attack on USS:

  1. Political: through hard hitting industrial action
  2. Legal: through national UCU focussing on bringing challenges to JNC/USS processes and rules, and
  3. Replacing USS ltd as a trustee.

It is clear that the USS Trustees must be replaced by either another company or partially through a rebalancing of its members and the removal of the independent chair with a casting vote. This independent chair has no formally political stake in the issue and, consequently, always sides with the most prudent option on the table. This is always the UUK’s option as they are being leaned on by The Pensions Regulator to reduce almost all risk in the valuation.

As Neil Davies has argued, it is vital that UCU is proactive in submitting plans to the JNC for replacing the USS Trustees. Without a proactive approach, UCU will remain reactive and reactionary; submitting plans will at least force UUK to provide reasons as to why they want to maintain the current status quo and this, in turn, may open them up to legal challenges.

Next Steps

It is clear that sustained and committed industrial action is essential to a successful campaign to save our pensions. Whilst the benefits of this period of action are yet to be seen, we would not have saved 50% of our pensions in the previous period of action without striking through that cold March. Whilst no-one would rather go on strike than do their jobs, and there are financial costs to doing so, the alternative to going on strike is thousands of pounds deducted from every member’s pension. You can see how much your pension will be reduced by using the UCU USS modeller.

Not only is this a direct assault on the remuneration we agreed with our employer when we signed our contracts, but such enormous reductions will have a significant impact on future employment: it is hard to see what will attract staff to work at Kent and other British universities when they can be so much better of financially abroad.

Branch officers will continue to pressure UCU HQ to take a proactive approach to addressing USS, and to ensure that industrial action is as effective as possible. For example, branches must have control of the days on which they strike so that they can work around reading weeks, etc.

We would also welcome input from members with expertise in the pensions sector or with governance bodies. None of the officers have specialist expertise in the area, but are keen to be as effective as possible in defending our pensions. Please get in touch with me if you have any expertise that could contribute to the fight.

Thanks and best wishes,

Chris

Co-Vice President on behalf of the Committee

Kent Finances Counter-Narrative: Brains not Buildings

Current Financial Context

The University’s financial performance in 2020-21 was ‘ahead of expectations’ with an overall surplus of over £4 million.  The University is ahead of its ‘cost-savings’ targets, and the total staff cost savings required by the banks have now been found. Staff cost savings were delivered one year ahead of schedule.

The University has saved an ongoing £17.1 million on staff costs since 2019-20 with O4S and KVSS. This amounts to a reduction of 6.4% of FTE, or 186 staff who have left and not been replaced, added to 2.4% of FTE, or 72 staff from 2018-19. Meanwhile over £2 million pounds per year is paid to just 12 members of the executive group.

Over the past 5 years, the University has spent £126.8 million on capital expenditure (buildings).

The University has outstanding debt of over £66.5 million, which it has spent on various building projects over the past 10 years, but has net assets of £269.6 million.

EG plan to spend another £59.2 million on capital expenditure over the next 5 years. This will not be financed through ‘further borrowing’ but instead funded through the University, principally through UG tuition fees.

‘Heading into 2022-23 a return to a small surplus is expected with increased income generation.’

Central Contribution Costs

Each subject area and Division is now expected to contribute a percentage of their income towards central University costs. This percentage target is different for each Division, with LSSJ having a high target of over 50%, while Natural Sciences have a much lower target of 30%. Overall, Kent has a much higher percentage central contribution target than other Universities. One member summarises:

45%+ contribution targets demanded now of individual schools is, in my understanding, to pay for the debt accrued previously and loans. Obviously, this percentage will go up with interests going up because of inflation. We need to reject the principle that debts accrued by others have to be paid by us.

Cross-Divisional Subsidy

As a way for the University to engineer reasons to target specific subject areas, each area and Division is now being tasked with being financially autonomous, and giving a high percentage of its income towards central costs.

Such a financial model is totally erroneous within a University context, where we are an ecosystem which supports and funds each other across many years. E.g. Given the much lower costs of running degrees in Arts & Humanities subjects, this Division has historically been subsidising the costs of more expensive degree programmes (like natural sciences) since the introduction of student fees in 2010. Now that the percentage contribution costs have been increased, the Division of Arts & Humanities is being targeted.

Analysis

Given the large amount of debt that the University has accrued paying for large-scale building projects, failing IT systems (Kent Vision) and investing in expensive projects like the Medical School, Divisions and Schools are now being tasked with footing the bill.

Instead of taking on further debt, the £59.2 million planned spend on the next 5 years of building projects will need to be funded through the University, principally through UG tuition fee income.

Therefore the University has increased its central percentage contribution costs from each subject area in order to pay off past debts and fund these future building costs. We are a University, not a real estate speculator.

We are one university and we value all staff. Brains, not buildings, are what makes the university.

We need to think about the future governance of the university and take expertise, knowledge and learning back to the core of what we do. That’s the only recruitment strategy that will secure our future, not lavish buildings.

Marking and Assessment Boycott FAQs

The branch committee have prepared an FAQ as a guide to the marking and assessment boycott we are currently operating.

The FAQ can be found here.

The marking and assessment boycott for our local dispute over threats to jobs and excessive workloads begins today, on 3rd March 2022, immediately following the national strikes. It will end once we have the commitments from Karen Cox that Kent UCU have demanded, or on 27th July 2022 when the current mandate for local action ends.

Claiming from the strike fund

Dear University of Kent UCU members,

Our branch strike fund has received 34 applications so far. If you need to claim, please do so ASAP, as the sooner you claim, the sooner we can pay out (and all claims must be received within 3 months of the loss of income). We have now paid 33 claims. Click here to make a claim.

There are plenty more funds available, particularly due to the kind donations of various members. If you afford to donate, here are the bank details:

Account name: UCU Kent LA26
Account number: 20391184
Sort code: 60-83-01
Unity Trust Bank

Best wishes,

Owen Lyne

Branch secretary, University of Kent UCU
on behalf of the hardship committee (Daniel Bearup, branch treasurer, Owen Lyne, and Trude Sundberg, branch committee member)

Casework – what is it, and what can it do?

Probation

Most new staff are on probation, which means even open-ended contract can be precarious, until probation is deemed successfully passed. Some examples of casework in this area:

  • Member told has failed probation and will lose job. Casework done, probation plan extended and then successfully completed.
  • Member told probation will be extended. Casework done, appeal successful and probation completed immediately.
  • Member told probation will be extended. Casework done, appeal unsuccessful, but work on supporting member though extended plan done and probation completed after extension.
  • Collective win – after experience from such cases, improvements made to probation policy.

Gross Misconduct

Staff can be sacked for gross misconduct, and naturally staff facing such allegations are very concerned. Examples of casework in this area:

  • Member facing student complaint. Casework to support member explaining what did and did not take place, investigation of case concluded that there is no case to answer.
  • Member facing complaint from member of staff they manage. Casework to support member and complaint not upheld.
  • Member facing complaint from another member of staff. Supported member through grievance process against them, to point where they were able to negotiate (acceptable to them, including financial terms and agreed reference) severance package (rather than continuing to fight and risking being sacked with nothing).
  • Member facing allegation of potential criminal conduct. Member supported, did lose job, but university did not pursue case further.

Performance Improvement

Some members are placed on performance improvement processes, which could ultimately lead to them losing their jobs for unsatisfactory performance

  • Member facing panel hearing. Assisted member make their case, which lead to case against them being completely dropped and action plan given to their manager.
  • Member facing performance improvement process, supported through process until completed successfully.
  • Member facing performance improvement process, supported through process until member decided to take a voluntary severance package.
  • Collective win – after experience from such cases, improvements made to performance improvement policy.

Redundancy/re-organisation/fixed-term contracts

Many members jobs are put at risk, either through precarious contracts, or through open-ended roles being redefined or removed. Examples of casework in this area:

  • Member with years of fixed-term contracts transferred onto open-ended contract.
  • Member with fixed-term contract coming to an end being helped to gain an extension of a year.
  • Members at risk during restructure supported to make counter-proposal which meant fewer jobs being lost.
  • Member concerned new role was setting them up to fail supported to gain clarity and more details on new role to point where they were able to accept it.
  • Members facing downgrades of roles supported to maintain current grade (either permanently, or for a fixed period) rather than immediate drop in income.

Injury, illness, ill-health, disability

Some members become vulnerable to management deciding that they can no longer do their job.

  • Member injured at work, supported by caseworker initially, then UCU nationally (with specialist barrister) and sizable financial settlement.
  • Member facing terminal illness, wishing to keep working and supported to do so until they could leave on their terms, and supported to receive ill health retirement benefits.
  • Members assisted to work with Occupational health to received reasonable adjustments or other improvements to their working conditions so that they could continue to work.
  • Collective win – after experience from such cases, university persuaded to sign up to TUC Dying to Work for better consideration of staff with terminal illness.

Why don’t we win them all?

Sometimes a case comes down to a dispute between two of members. While we can support both (with different caseworkers), sometimes it is a zero-sum game in terms of outcome – both sides cannot win, but on other occasions we can improve the process for all.

In some cases, our member is simply in the wrong.

In some cases, we have a moral/ethical case, but employment law and/or university policies are not sufficiently supportive. Hence work on university policies through the Joint Staff Negotiating and Consultative Committee (JSNCC) remains of great importance.

 

Owen Lyne, branch secretary

 

 

 

 

Total Pension Loss Estimates

The USS issue is horribly complex, so UCU pension reps. have been trying to come up with illustrations to make it clearer. This graph shows that reduction in total pension is between 100k and 200k for people born around 1990.

Pension loss graph

Further graphs, calculations and data can be found here.