The USS 2020 valuation is not fit for purpose, the governance of USS is not fit for purpose. The behaviour of the Pensions Regulator is at odds with its remit. The situation has changed considerably since 2019 when UUK had ‘full confidence in the way the giant USS scheme was being run’ FT, July 2019. UUK have publicly written to USS to call for a review of the valuation, describing the valuation as ‘unjustified’, ‘unnecessary’, and ‘unaffected by the evidence presented’. The actuarial report by Aon for UUK describes the valuation as ‘misleading’ and a ‘hall of mirrors’. In writing to the Pension Regulator, UUK state ‘we are particularly concerned about the influence of the Pensions Regulator on the USS Trustee’ and ‘we have seen little evidence to date that there is focus on your statutory objective’. The UUK consultation document explicitly states that ‘scheme governance is long overdue a review’. Astonishingly USS Trustee, which has total power over the £80 billion in assets of the University sector pension fund, responsible for the pensions of over 400,000 people has refused to conduct a review as requested by employers and employees as represented by UUK and UCU. So UUK are now consulting employers on a substandard valuation.
Edit: you can see the estimated effects of the new valuations’ scenarios on your pensions using the web app here.
Where does this leave the University community?
All USS Defined Benefit pensions accrued to date are guaranteed, firstly by the collective strength of the HE sector and then by the Pension Protection Fund. However, as explained by Sam Marsh, the USS Trustee has forecast such ridiculously low asset returns that a shortfall of between £15-18 billion is estimated. As discussed by Neil Davies, the approach adopted by the USS Trustee appears to involve reverse-engineering.
So the USS Trustee is now claiming that either huge contributions or hugely detrimental benefit reductions are necessary. The claims have been met by widespread public criticisms, and are considered ‘misleading’ by all stakeholders. The proposed contributions are all unaffordable, and there is widespread agreement, including with Mike Otsuka, that the UUK proposal to cut benefits are ‘insulting and provocative’ as described by Jo Grady, UCU General Secretary. The UUK Aon proposed structure is a more expensive version of a proposal made in 2018, implementing a significant deterioration in pension benefits. This proposal should be rejected on the grounds that no one should agree to have their pension devalued by 20% as a consequence of valuation that is not fit for purpose.
And what can we collectively do about it?
If you are a USS Member or eligible to be a USS member, you can share your views with your employer. You can do this two ways. You can respond to the University of Sussex survey that will opening today and close on Thursday 29 April. The UUK survey template asks vague questions about ‘flexibility’ and ‘concerns’ but without context and as such responses could easily be misinterpreted. There are no questions that allow staff to give views on governance reforms, conditional indexation, there is no opportunity to share thoughts on options such as legal action or political lobbying or industrial action. University of Kent UCU has not been consulted on the survey and we will raise our concerns. Secondly, you can share your views with branch and, if you would like to do so, please email me to arrange a meeting.
Where to start in forming your views?
We are fully aware of the overwhelming complexity and the time available to people to commit to forming views. On top of the initial valuation documents, the consultation documents alone are over 200 pages long. They are unnecessarily complex, obscure and misleading. There is considerable work to do to unpick the nonsense from the small amount of useful but disjointed information. We don’t expect USS members to have time to unpick the details and, even with the support of UCU and other pension reps, we are struggling. However we do want to talk to you and hear from you all. There needs to be action on USS, and in addition to your views on the valuation, and we need to know what kinds of action you would support.
Previous Communication with EG
Having outlined the situation in general above, here is a record of our communication with EG on pensions. We have so far written two letters to Karen Cox and have had two replies. Members will be able to see for themselves the level of commitment being made to influence the USS Trustees and their position.
Karen Cox responded to our letter with a brief email, claiming that the University’s voice would be weaker in unison with the branch’s voice than without. Our response is summarised in the second letter.
Cox did not respond with anything new to this letter, but instead passed us on to Martin Atkinson (who is now director of HR given the departure of Alison Ross-Green). Atkinson has since offered to meet with the branch in addition to a sub-JSNCC meeting scheduled for the 30th April, though we will hold off on accepting this invitation until that meeting.