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August 22nd, 2018:

More on USS pensions (and why the USS consultation is just a paper exercise).

Members will have seen the SUSSED statement, and had personal emails, informing them that USS is consulting on increased pension contributions from both employers and employees. USS have announced that they have opened the statutory consultation about these increases. The USS consultation is, we suspect, like all previous USS consultations – simply a paper process to comply with regulations. We have no evidence that USS has ever responded to input from scheme members or made any changes following such consultations.

To summarise the USS statement, the planned increases in contributions would be staggered, from April 2019, adding 0.8% to the existing 8% employees pay for April 2019 and this will rise in two steps to 11.7% in April 2020. Employers would also pay larger phased increases, and their 1% match of voluntary additional contributions would come to an end. These plans are being imposed by the USS Trustees under the scheme’s “rule 76” as the Joint Negotiating Committee (JNC), composed of UCU and employer representatives, has not yet reached agreement on how to balance contributions and benefits to the actuary’s satisfaction. USS claim the increases are needed to cover the projected (but much disputed) deficit in the scheme.

Following the strike action earlier this year a Joint Expert Panel was set up to look at the USS valuation and the alleged deficit. The JEP is continuing its work and will report to the JNC in September 2018. USS have said that their Trustees will continue to engage constructively with the JEP.

The valuation of the pension is at the heart of our dispute. The November re-valuation offered a gloomy forecast of a growing deficit. This re-valuation was provoked and supported – as we subsequently discovered – by a minority of employers with vested interests in shifting to a defined contribution scheme. (Members will recall the additional and coordinated voting by several Oxbridge Colleges).

In response to the earlier September 2017 valuation of the pension, USS suggested that employing institutions could afford increases, and as Mike Ostuka recently noted it would have been possible to retain the current pension benefits (minus the 1% match) via a more modest 5.8% total increase in contributions.

The November re-valuation of the scheme ‘created’ an allegedly much larger deficit but in recent months this has dropped from £17.5bn to £8.4bn in response to new modelling based on revised mortality trends and bond yield forecasts.

Our action earlier this year forced the employers and USS to suspend their plans to reduce our pension benefits and they agreed to set up the JEP.  We believe it is unlikely that the current proposals to increase contributions will actually be implemented as the employer costs are very high; they result from the trustees following the rulebook without waiting for the JEP or JNC.

Rather than wasting time engaging with the USS paper consultation, members here might like to write to our VC asking him not to support those in USS and Universities UK who want to reduce the value of our pensions. After a year of demoralising cuts and restructuring it is time that our VC stood up for his staff.

For those who want to read more on about the pension UCU has provided regular updates about the JEP. Mike Otsuka has threaded a series of his blogs about USS. There are also a number of new  USSBriefs on this topic.