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On the health of our USS pensions

Dear members,
We are aware that you may have been following the stories about USS pension on Radio 4 and Newsnight last week and on the BBC website.

Colleagues at Sheffield UCU branch have circulated the following helpful information:

The USS annual members report on which the story was based (issued two weeks ago) shows that the deficit has in fact sharply fallen over the previous year. It is difficult to avoid the conclusion that the fake ‘revelations’ are timed to undermine support for our strike on 31st October.

So what is the reality?

*   The scheme was officially 92% funded in March 2011, 77% funded in March 2012, 77% in March 2013, and 83% funded June 2013. This corresponds to an official deficit of £2.9bn in 2011 rocketing up to £11.5 billion by March 2013 but dropping to £7.9 billion just three months later.

*   This incredible volatility gives a clue to the underlying problem with the official figures. Pension schemes are very long term investments and should be judged on that basis whilst the law requires that they are judged on short term criteria.  The huge pension fund deficits across the country reported in the 2000’s, including the USS one, are as phoney as the huge surpluses in the 1980’s. USS is in good health based on real world criteria: its income exceeds expenditure on a long term sustainable basis.

*   Pensions are simply deferred pay. And the proportion of University sector spending which goes on staff, including pensions, has in fact been in continual decline.  It was roughly 65% when fees paid by home students were zero and has gone down to about 55% (54% in Sheffield) now fees are £9,000.  If Newsnight really wanted to locate the reason for rocketing student fees they would need to look elsewhere than staff pay and pensions.

*   Britain has one of the worst records in Europe in pensioner poverty, corresponding to our lead in inequality. There are 20,000 to 30,000 ‘excess deaths’ of elderly people in winter every year in Britain – dying of cold, hunger and diseases contingent on them.  This is the real pensions scandal.

For a cogent explanation of the USS ‘deficits’ please see a letter to the THE from this same scare-story season last year, ‘Accounting tricks and pension deficits’.

——-
Professor Catherine Pope

Southampton UCU Honorary Treasurer

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