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USS Pension

Get The Vote Out: Pensions update, and just who/what is Mercer?

We hope by now that all members will have received their half-a-Christmas-card with our cheery round robin reminding you to vote. You may also meet some of us on Thursday, as we knock on doors to introduce ourselves and to, once again, remind you to vote.  We need to stress to each and every member how important it is to get that ballot paper posted, regardless of whether or not you support the action. The turnout is key to whether or not it will be a valid ballot.

The only member who did not receive half a Christmas card was the Vice-Chancellor himself, as we understand that he no longer contributes to USS, having achieved the maximum number of years’ contribution.  We sent him a whole card, but in it we included a letter:

Dear Sir Christopher

On behalf of USS and UCU members employed at the University of Southampton I would like to ask you once again to challenge the UUK and USS board proposals for the future of our pensions.  Your colleague, the Vice-Chancellor of the University of Warwick, Stuart Croft, has produced a couple of blog posts that provide a model for how someone in your position can support the employees of his institution by questioning the rationale behind the latest changes: https://warwick.ac.uk/services/vco/blog/

 

We note that you have invited Mercer to brief staff on 18 December 2017, claiming that Mercer work only for the University of Southampton, and not USS, UUK, or UCU.  While it may be that the representatives from Mercer who join us on 18 December have no professional relationship with USS, we note that the USS Actuary, Ali Tayyebi, is also a Mercer employee. It would be helpful if you could make this potential conflict clearer in the material advertising the event.

 

Given the hotly contested debate about the methodology for valuing the pension, and in the interests of giving staff the fullest possible evidence on which to base their decisions, we ask you also to invite representatives from First Actuarial to provide their view of the situation, at some point early in the new year before the ballot closes. First Actuarial have provided an alternative narrative throughout the negotiations, and have recently completed an evaluation of the latest proposals: https://www.ucu.org.uk/media/8916/TPS–USS-no-DB-comparison-First-Actuarial-29-Nov-17/pdf/firstacturial_ussvtps_nodb_29nov17.pdf. This demonstration of impartiality would be welcomed by members.

We have not yet received a reply.

In case the relationship between Mercer and USS is not clear to our readers, USS state on their website that the scheme valuation “is carried out by the trustee with the support of the scheme actuary, an appointed specialist who reports to the board, as required by law and under the scheme rules.”  The scheme actuary, as we stated in our letter to the VC, is employed by Mercer. You can even download Mercer’s latest valuation from this page on the USS site.

Our Pensions department sent out an invitation to all USS members on 11 December, saying “The session will be run by independent pension experts, Mercer, who are working for our University and not for USS, UUK or University and College Union (UCU).”

We note that as of 13 December, the news post on SUSSED still states: “The Mercer pensions experts, who will run these sessions, work for the University of Southampton, not for USS, Universities UK (UUK) or University College Union (UCU).”

We asked Pensions on 11 December and 13 December to ensure that members were made aware of the interest. As yet, they have not.

We find this extraordinary, particularly given the number of times senior management have accused UCU of lying and misleading its members, students, and the public.

Perhaps they know something we don’t, or have a different definition of the word “independent.”

We do hope that Mercer, at least, will be honest with those who attend the Monday session.

 

 

Our communication with the Vice-Chancellor regarding Warwick’s response to UUK’s proposals for USS

Southampton UCU sent the following email to the Vice-Chancellor this evening:

Dear Sir Christopher
We write to you again on behalf of our members and all members of staff here in the USS pension scheme. Following the USS Trustees’ adoption of a more conservative approach to the scheme valuation, we understand that Universities UK (UUK) is supporting the closure of the defined benefit element of the current pension scheme.

We would like to know, did the University of Southampton approve the latest UUK proposal before it was put to the negotiators, and if so, will you let us see the costings related to the proposal?

We ask you to put every pressure on UUK to change this decision.

This change, if implemented will have a huge, negative impact on staff here, and in other Universities. The closure of the defined benefit scheme will result in a more cautious investment strategy and will inhibit future funding of our pensions. This will be detrimental for current and future staff, and puts even those already drawing a pension from USS at risk.

This will destroy the future financial security of our staff. Not only that, the reducing of employer DC contributions to 12%, in part to finance alleged historic deficits (which, if they exist, are the employer’s responsibility) represents a huge intergenerational unfairness.

We ask you to stand with Stuart Croft, Vice-Chancellor of the University of Warwick, to defend our pensions, and to endorse his statement with a statement of your own. See: http://blogs.warwick.ac.uk/execteam/entry/which_way_forward/

The valuation of the scheme and the approach to the management of risk are hugely contested. Stuart Croft has called for “more transparency, particularly on issues such as self-sufficiency, mortality assumptions and projections for gilt yields, since these are the building blocks upon which a new greater conservatism has been placed.” Please support his challenge to the current increasingly conservative approach to USS.

We are aware that local competitor universities such as Portsmouth and Bournemouth offer alternative, more attractive pension schemes, and this is damaging the recruitment and retention of staff, and our reputation. The University of Southampton must be able to offer a decent pension to current and prospective staff, and must work to protect the pensions of its retired staff. We urge you to join with other VCs opposed to the USS proposals, and work to defend the future pension benefits of all members of USS.

Sincerely
Southampton UCU Executive Committee

Outcomes of the General Meeting, 24 October 2017

As members will be aware, we held a General Meeting this lunchtime to update the membership on local matters, and to discuss the USS valuation and the potential for a national dispute.  The President’s report highlighted the current position of the University after the results of the TEF and the NSS, citing some sadly prophetic words from national UCU’s own briefing on TEF, released in late June. We also briefed on progress and developments regarding our local priorities, set at our Strategy Day: appraisals, MEQs, consultations, and settlement agreements.

Our invited speaker Chris Mason, UCU Pensions official, and our own Denis Nicole, who sits on UCU’s National Executive Committee, helped shed light on some of the more detailed and contentious issues surrounding the pensions valuation, and there was a lively discussion about what the branch felt was important to understand about pensions, what strike action might mean, and what kind of strike action we felt able to support.

Thanks for a well-attended meeting!

Two draft motions for the special conference and meeting to be held in Manchester on 9 November 2017 were submitted to the GM for approval.  The discussion did much to clarify what matters to members of the branch, and helped everyone understand better the issues at stake.  It was to the credit of the members attending that this respectful and productive debate resulted in amendments that were unanimously approved.  They are reproduced below.

We are still looking for a third delegate to attend the 9 November events on our behalf – it is essential that we are well represented, as if we do not use our representation to its maximum benefit, we may end up with a call to action that does not reflect well our priorities here.  If you are willing to represent us (we will pay your expenses!) please get in touch with the branch via email, or on 023 80592364 as soon as you can.

Many thanks!

*****

Motion for Special HE Sector conference to determine national UCU industrial strategy

Motion on industrial action to protect pension rights

Conference notes

  1. That the willingness to take industrial action is necessary to defend USS pensions.
  2. That a marking boycott is not an effective threat in many institutions because of the increasingly casualised workforce, and a boycott’s disproportionate burden on a subset of the full membership.

Conference believes

  1. That well-supported work-to-contract and full strike action are the only effective means of delivering a meaningful national action.

Conference resolves

  1. To ballot for industrial action with strike action plus work-to-contract not before January 2018; with escalating strike action as necessary.
  2. To increase the quality and quantity of advice to branches on effective work-to-contract strategies.
  3. To escalate the political campaign to win the argument for not changing the pension scheme.

 

Motion for meeting of pre-92 USS branches to determine a response to proposals in respect of USS:

Motion to resist ideological interference in USS proposals

Conference believes that

  1. Predicting a possible future unsustainable deficit via a disputed methodology has provided an ideological justification for the privatisation of collective Defined Benefit schemes and movement into individual Defined Contribution schemes.
  2. The recklessly prudent change in investment strategy to ‘manage risk’ and the Pension Regulator’s recent re-evaluation of the covenant are ideologically driven rather than rooted in reality.

Conference resolves

  1. To state in all UCU literature that we insist that employees should not pay for this constructed deficit, either in increased contributions or in reduced benefits.
  2. To encourage the USS JNC to resist inappropriate intervention from the Pension Regulator.
  3. To refuse to accept detrimental changes to the USS pension scheme by identifying viable solutions which allow retention of secure benefits for members.

 

Your pension in their hands

Amanda, our branch administrator, explains the importance of the proposed changes to our pensions

You may have noticed exec members on early morning missions last week, trying to get the vote out in UCU’s consultative ballot over action to preserve our pensions.  And the maelstrom surrounding the USS pension valuation seems to be strengthening, even since the discussion we had with senior management at the October JNC.

At the meeting we were shown a draft press release explaining in more detail the University’s response to the employers’ consultation, which we assume will be forthcoming soon.

Over the weekend more information has emerged about political meddling in the valuation, that goes beyond even the Pension Regulator’s letter to USS, published in the Financial Times on Friday. Henry Tapper, one of First Actuarial (UCU’s auditors) blogged about the whole sorry business yesterday – showing that Frank Field (Chair of the Work and Pensions Committee), the Pensions Regulator, UUK, and USS have been involved in correspondence over the summer, trying to shore up all their individual interests in the matter.  As Henry points out, though, the only missing voice in this conversation is ours – the future pensioners.

Mike Otsuka, one of UCU’s most active pensions experts, is advocating a way out of this conundrum, that has the ideological support from the actuarial working for both UUK and UCU: a scheme that relies on discretionary targets rather than promises that he explains here.

UCU members have until 18 October to vote in the consultative ballot.  If you have not received your ballot email, or have lost it, you can get another here. We strongly recommend that you vote YES, that you are prepared to take industrial action to save our pensions.  If you are not yet a member of UCU, you still have time to join, and to vote in the ballot: click here to join online, or for information on how you can join over the phone.

We are holding a General Meeting on 24 October at Highfield, after the UCU consultative ballot has closed. Mike Otsuka has supplied us with some materials, and we are trying to arrange for an additional speaker.  We understand that some members at outlying campuses may not be able to attend, so we will do what we can to help: we can certainly circulate the meeting materials, and if you can help us with room booking, we will do our best to come to you.

 

USS pensions update: a conversation and a quote

Last week, I wrote urging you to vote in UCU’s consultative ballot on whether you would be willing to take strike action to safeguard our pensions.   At that time, Southampton UCU had not had any indication from senior management regarding the University’s position on the USS valuation. I hoped that the University would take its responsibility seriously, and perhaps take a position like the University of Sheffield, critically evaluating the methodology and inputs for the valuation.

I have now met and discussed the University’s response with the Vice-Chancellor and President and fellow SUCU exec members met with the Director of Finance and HR team last week. I asked Sir Christopher if he would be willing to give me a quote that I could share with members.  He kindly responded with the following:

Pensions are extremely important to colleagues, and as a University we wish to be able to offer pension schemes which provide the best possible benefits to employees and which remain sustainable well into the future to provide the income we all need in retirement.  We are particularly keen to ensure that employees throughout their career are able to participate in a long term sustainable pension and to be aware of the importance of joining a scheme as early as possible. The current USS scheme is heavily in deficit and the University along with all other institutions who participate in this scheme are making substantial payments to address the huge deficit in addition to the pension contributions, currently of 18% of salary, together with 8% from employees in the scheme. The University has responded to the consultation on the pension scheme and after careful consideration has supported the proposal for a defined contribution (DC) scheme for future benefits because it would provide greater certainty in terms of benefits and would be sustainable whilstgiving more flexibility to all our staff. The scheme’s Trustees will have to satisfy the Pensions Regulator that the scheme is sustainable and that the sector is able to address the growing deficit.  Further increases in employer pension contributions and any increase in deficit payments by employers are simply not affordable and would threaten both the future of the University and that of the pension scheme.

Sir Christopher shares our frustration with the current situation, and so I urged him to work with both the UCU and UUK negotiators to interrogate the valuation methodology and the investment strategy proposed by USS.  I suggested that UCU members here wanted our senior management to take the consultation seriously, and to give serious consideration to the materials made available by UCU.

There are academics who, in the Financial Times, on WONKHE, and elsewhere, have closely criticised USS’s methodology, voicing serious concerns about USS’s flawed assumptions underpinning its valuation. UCU commissioned an independent report from First Actuarial that leaves the USS Trustee’s proposed approach in tatters, concluding:

The USS does not have negative net cash flow and is not likely to have in future (subject to dealing with increasing longevity, as already noted). Cash and short dated investments are not needed to meet net outgo and to protect against forced disinvestment. … Investing to achieve a lower return than indicated increases the probability of requiring further employer contributions, indeed, it makes it certain that more contributions are needed, in direct conflict with Test 2 and the wishes of the employers (p. 15).

I remain troubled by the role of the Pensions Regulator in the process. It would be a travesty if the entire consultation was invalidated by the Trustee’s capitulation to the Pensions Regulator’s views: this would suggest that there was no point to consultation in the first place.  First Actuarial state:

the law does not give TPR a role in the decision making process of an incomplete valuation. We note with concern the comment [in the Valuation] that ‘the trustee has shared its emerging proposals throughout the process with the regulator as well as stakeholders.’ TRP’s objectives are not aligned [my emphasis] with the objectives of the trustee and the employers…. the trustee’s role is to act in the interests of the members and the employers (p. 7).

At the root of the employers’ concerns are the implications of contribution rate rises. While employers are absolutely within their rights to run their business according to their best interests, the First Actuarial report argues that there is no need for contributions to rise – and we would wish both the University and UUK to take this seriously.  Although we understand that the decision has not been made without consideration we feel it is regrettable that the University supports a move to a completely Defined Contributions pension, which seems at odds with its desire to recruit and retain quality staff. First Actuarial has also prepared a report comparing the benefits of USS with TPS, the scheme available to employees in post-1992 universities: in all tests, TPS already outperforms USS. EU universities, too, have occupational pension schemes which hardly make employment in a USS university seem attractive.

Ultimately, members need to bear in mind that USS is a private pension scheme. Its existence depends on participation by its members, and, if we really want it, we now have a choice to leave.  The scheme’s employees are paid for by our pension contributions, and the vast salaries on offer to them make their arguments about the need for prudence and the funding deficits seem frankly distasteful: see the Annual Report, Report and Accounts (scheme), p. 25 – a mean average base salary of £63K pa, 113 members paid over £100K pa, with the top earner taking home in excess of £1.6m pa.  We know that the employers are just one of three sides negotiating in the room – well, four, if you count the éminence grise of The Pensions Regulator – but we have no direct way of putting pressure on USS, so we must put pressure on the employers, instead.

There is no doubt, either in my mind or in that of the Vice-Chancellor, that a dispute would be damaging – but that is in the nature of industrial disputes.  We want UUK, USS, and The Pensions Regulator to be in no doubt that we abhor the devaluation of our pensions – what we used to call our deferred salary. They represented a covenant between the sector and its workers that we could accept lower wages than could be commanded in the private sector on the understanding that we would be looked after well in retirement.

We will be holding a General Meeting on 24 October, after the UCU consultative ballot has closed.  In the meantime, we continue to urge you to vote in the ballot: if you have not received your ballot email, or have lost it, you can get another here. We strongly recommend that you vote YES, that you are prepared to take industrial action to save our pensions.  Let those who will decide our future hear our voice.

Sincerely,
Your UCU branch president,
Laurie

Today’s general meeting

Thank you all for coming to today’s General Meeting in building 45. I hope you found it interesting and useful. This has been a busy week for your branch committee; events in Modern Languages have been moving quickly.

I have uploaded the slides from the meeting, complete with the motions as amended. Please:

  • continue to let Amanda know any information you find out about changes to working practices, or anything else you think important;
  • tell us how you got on with the new L4-6 appraisal. Was teaching given due prominence?
  • Think about coming to UCU Congress as a delegate, and
  • prepare to take action to support our pay claim.

Remember that changes to USS pensions and National Insurance will cost you money this year. Colleagues in the Final Salary scheme will pay 0.5% more; newer colleagues in CRB will pay an extra 1.5%. And you will lose about a further £500 in NI payments. So, if we don’t receive at least a 2% pay rise, many of us will actually be paid less in the coming year.

Denis Nicole
Branch President

Summer casework: why we all need to be in UCU

Over the summer, we have been approached by several university employees who have needed independent support and advice. The University regulations allow union caseworkers to support employees in a variety of situations, and generally the independent support provided by union is very well received. In some cases, they were long-standing employees who had just joined the union because of their problem. In others, they were non-members who approached us asking “if I join, what can you do for me?” Yet other non-members asked if they should hire a lawyer.

These approaches all suffer from a lack of understanding of the university’s (and most other employers’) processes. Let’s deal with them one by one.

Can I join if I have a problem?
Yes, you are very welcome to join at any time. The union would, however, be completely unable to balance its books, or supply volunteer caseworkers, if large numbers of staff were allowed to join, and pay membership, only while they have an employment issue. The union’s legal service imposes a strict, but short, waiting period on new members before offering support. Similarly, within the branch, we are unlikely to be able to offer support for pre-existing issues with new members.

If I join, what can you do for me?
As I say above, we can support you with your next problem. We may be able to offer informal local assistance with your current difficulties. All the while, you will be helping to improve pay and conditions for all of us.

Should I get a lawyer?
This is the big misconception. A lawyer will be of almost no use to you until it is too late. You can take your problem to him or her, and they can offer you advice. But they cannot accompany you either to an investigation or to a disciplinary hearing. You will be on your own. And they probably will not know much about local conditions at the university. Your lawyer can come to an employment tribunal, but by then, after you have been sacked, it is almost certainly too late. Even if you win, you will almost certainly not be reinstated. The chances of winning are about fifty-fifty; if you win, you can expect a cash settlement of perhaps several thousand pounds, but no job to go back to.

Almost all of the good outcomes we achieve for members are the result of dedicated work by our trained team of volunteer caseworkers. They meet with members and come to investigation and disciplinary meetings. Their accreditation training is supplemented by wide experience of what actually happens at Southampton. And, within the limits of confidentiality, they share experiences at regular meetings. In most cases, we are able to prevent problems escalating. For the more intractable cases we can call on paid union professionals, who (unlike lawyers) are also entitled to come with you to meetings. Finally, if all else fails, we are able to offer support at a tribunal. But, as I said, by then it is probably too late to keep your job. Here is what the university writes:

The member of staff has the right, if they wish, to be accompanied by a workplace colleague or a trade union representative.

The representative/companion is permitted to address the hearing in order to put forward the member of staff’s case; they can sum up the case and respond on their behalf to any view expressed at the hearing.

The representative/companion is also permitted to confer with the member of staff during the hearing.

It should be noted that the representative/companion has no right to answer questions on behalf of the member of staff, to address the hearing if the member of staff does not wish him or her to do so, or to prevent the employer explaining its case.

Representatives/companions have an important role to play in supporting a member of staff and are allowed to participate as fully as possible.

There are other important reasons for you to be in the union. If, say, a student complains about you, you will be judged according to the university’s policies. University HR won’t be much help; their role is to protect the institution, not the individual. If the policies are unfair, you don’t have much hope. We are a recognised trade union, and the university has to negotiate these policies with us before adopting them. We are able to use our experience of casework to develop policies which work for both university and staff. Our effectiveness depends on how seriously we are taken by the university; we have far more influence when we have a high membership. Indeed, for matters affecting only level seven staff (Professors, etc.), we are not yet recognised and the university declines formal negotiation. So, if you join as soon as you arrive here, you are helping to protect yourself from policies that might later be used against you.

Finally, we negotiate, and occasionally go into national dispute, over pay and pensions. We improved the employers offers on each in the last round of changes. The current round of pay negotiations is under way and pensions are again under threat. We need your support now.

Join here.
———————–
† See Struck Out, by David Renton.

Denis Nicole

Flexible retirement: get it while you still can

I wrote about flexible retirement a while back. Several of us have been able to take an 80% flex, and collect our USS pension, without difficulty over the past couple of years. It seems that now, however, management attitudes are starting to harden. We have heard rumours that Welsh universities have been denying flexible retirement; now we have an example of Southampton making it more difficult than it should be. Guidelines have been circulated in FPSE that

FEG would expect staff with no research funding to retain teaching commitment

In other words, however much you retire, you will still be doing a full FTE of teaching. I think that is unreasonable. And surely it is research quality, not funding, that should drive decisions? The guidance also carries the unsavoury implication that teaching is an activity which colleagues have to be pressured into doing; how will that benefit students or deliver better NSS scores?

If you are thinking about flexing, it would a be good idea get in touch with the union before starting negotiations.

———————–
† I love this term. It seems that, whenever the university wants to create policies without bothering to negotiate with the recognised trade unions, they call them “guidelines”.

Denis Nicole

My response to the USS consultation

Here is what I wrote.

Denis Nicole.

Things an individual can do to maximise their pension

The new changes to our USS pension are very unattractive. There are, however, several things you can do to improve your position at retirement. Here are the ones of which I am aware:

  • Get into a scheme with better inflation protection. The TPS pension, offered by Post-92 Universities has inflation protection at CPI+1.6%; this roughly keeps up with average pay. Currently (but not for long) USS is in the Public Sector Transfer Arrangements, which allow you to transfer your existing USS pension rights into TPS or, for example, the NHS scheme. As shown in my previous post, this really protects your benefits. The downside is that you will probably have to change jobs. I guess you could, for example, move to Solent.
  • Retire a bit. If you were employed and at least 55 on 1st October 2011, you can retire at 60 without penalty. This is a big deal; if you didn’t meet the age cut-off, your pension would be reduced by about 20% for the rest of your life. The really attractive thing to do is to retire 20% (go to a four-day week and, like me, don’t come in on Fridays) and collect 80% of the pension. If you’ve been here a while, you will find that your overall pay goes up, while you work shorter hours. You continue to accrue pension (at 8/10 rate) and when you finally retire you can collect this and your remaining 20%. An added advantage is that your pension is calculated not on your last year’s pay, but on the best three of your last thirteen years, corrected for inflation. If you’ve been at the top of a scale for a while, your pay has not been keeping up with inflation and you will have a pensionable salary which is more than you have ever earned. An unmissable deal.
  • Pay cash AVCs. The Prudential AVCs give a reasonable return but that’s not the real point. They are a way of deferring and eliminating income tax. Money you pay in is paid before tax. You can later take out 25% of the cash value of your pension tax-free. You can take all the rest out too (there is no longer an annuity obligation) and pay tax only at your post-retirement tax rate. Even better, if you have a retirement pension, the total value of your pot is calculated as twenty times your pension plus all the cash (AVCs and USS lump sum); you can take up to 25% of this entire pot tax-free. This right will be lost for future AVCs after April 2016. You should set up AVCs before collecting any pension; the government doesn’t like to see pension money recycled.
  • Don’t forget the various bits of state pension and any other occupational pensions you may have.
  • You don’t ever have to retire. Keep your job as long as you want, and can do, it.
  • Get married to somebody young. USS will pay them for life after you die. Kids (potentially up to age 23) get paid too.

There are a couple of other important benefits which I hope will not affect you.

  • Ill health retirement. If you think this might affect you, do not resign. It is a complicated matter and you need UCU and USS advice before taking any action. If you have only a small pension, your family will be much better off if you stay employed and die “in service”. Resignation also seriously harms your chances of getting an enhanced pension through ill health retirement.
  • You should fill out the “nomination” form from USS. This will ensure that, in the event of your death, your dependent will get some money right away. If you don’t, there will likely be a delay and they might have to pay probate costs before receiving anything.

Denis Nicole