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February 17th, 2018:

An open message from a member in Medicine: The USS Pension Hypothesis

This message was sent by Tilman Sanchez-Elsner to his colleagues on 15 February 2018.

I am writing to inform you that there may be strike action this February and (perhaps, hopefully not) in March that, unfortunately, could disrupt our ability to do our jobs.

There has been enough blame game being played when discussing the USS pension issue, so I would like to take a more “scientific” angle on the problem to try and simplify it detaching it from emotions, which is what we usually do in our profession.

Hypothesis: “There is a huge deficit in the USS pension.”

There are two options:

Hypothesis is FALSE: There is no deficit (or it is only transient, due to market fluctuations), there is no need to change our pension scheme. UCU (or, better, the Union’s actuaries) claims this is the case; depending on whether you calculate it, we might even have a surplus.

Hypothesis is TRUE: There is a long-term deficit. UUK (our employer) claims this is the case. We have to tackle the deficit.

UUK want to do this by reducing our current scheme from Defined Benefit (guaranteed income,) to Defined Contribution (no guaranteed income). This, according to economists in papers such as the Financial Times, is not the solution to the deficit. It is, yes, the solution to the risk that the deficit poses to the employer.

Why? Because in a Defined Contribution Scheme, the risk is placed on the pensioner. If the market hasn’t performed, if there is a huge deficit in the pension pot (remember, Hypothesis is TRUE) you will pay for it by getting a lower pension (some calculations claim -10K/year).

Conclusion, the deficit will stay rampant (if TRUE, remember) for the next 15-30 years (while USS is still paying mostly Final Salary pensions, the previous scheme, before Defined Benefits). By the time some of us retire, there will be very little in the pot unless we take action now and stop the deficit from bleeding us dry.

I am no expert, so I am not going to dare offer a solution. UCU suggested that increased contributions (by both employer and employees) could help tackle the deficit, if it exists. I just say UUK have to sit down with UCU and take this problem seriously with a credible solution to the deficit, not leave the hot potato to us. They have rejected all of UCU’s proposals.

As a biologist, I believe in competition as an important driver in the international academic ecosystem. That is why I think that a weak pension scheme, together with other recent national events, may be a huge hindrance when trying to recruit brilliant academics from neighbouring countries.

As a biologist, I also believe that co-operation is an important driver in any ecosystem. This is why I am desperately asking our management to sit down with UCU, to talk, to negotiate, to co-operate in finding a solution to a problem that won’t go away with a change in the scheme. This view is shared by our Government, in a letter I just received from our MP Caroline Nokes (Southampton North, CON): “The Government encourages both sides to continue negotiating and come to a sustainable and fair agreement.”

In an attachment to that letter, Sam Gyimah, Minister of State for Universities, Science, Research and Innovation claims that “[…]an independent report commissioned by USS concluded that universities with USS schemes would remain strong and stable for at least the next 30 years.” In the same letter he expresses the interest of our Government in “[…]discussions on what, if anything, was needed to ensure that defined benefit pension schemes [such as ours] remain sustainable, whilst protecting members’ benefits.”

Summarising, let’s talk, let’s find a solution.

Feelings and emotions: I always thought that, if I worked hard enough I would be rewarded… and it has generally come true, particularly here, in the Faculty of Medicine… I feel, though, that, if they destroy our pension, no matter how hard I work or how much I produce, the result will be the same when I retire. I don’t want to find out that, when I am old and cannot work anymore, when I am defenseless, I will have barely enough to live and will have to spend the last years on this planet in poverty or unable to pay for specialized care or equipment when needed. It will be too late to protest then.

I think we deserve better.

Please join us and help us bring UUK to the negotiating table. Join UCU and strike. Short of that, please do not come to work the days of the strike. You have the legal right not to cross a picket line in solidarity with us. Don’t worry, we are not going to “intimidate” our own colleagues and friends nor the Hospital’s patients!

With a daughter in her final year here in Southampton, with teaching duties, papers and grant deadlines… the last thing I want is to strike. But I do not see an alternative to make UUK talk to us in a meaningful way.

Best Wishes,

Tilman

PS1.- If you want to help, please join UCU https://www.ucu.org.uk/join

PS2.- This e-mail is my personal opinion. For UCU´s take on the problem:https://www.ucu.org.uk/why-we-are-taking-action-over-USS

PS3.- If I have offended anyone, please accept my apologies, this was not my intention.