As the UCU Rising ballot opens today, Southampton UCU branch officers have today written to the Vice-Chancellor asking him to reconsider the University’s stance on USS and for him to provide a formal response to six USS facts.  We will keep you updated of any response.

Email to: Vice Chancellor Mark E Smith

cc: Sarah Pook, Executive Director of Finance

6 September 2022

Dear Mark

As you know, UCU are once again balloting members on industrial action to fight back against unjustified cuts to USS pensions. Members at your university stand to lose up to 35% from their pensions due to cuts which were imposed based on a flawed valuation in March 2020 when markets were crashing. Newer members to the scheme, part-time staff, casualised staff and women all stand to lose the most. This is disgraceful, especially given that these staff are also the ones most likely to be squeezed by the cost-of-living crisis.

We are writing to request that you respond formally to the following six important facts on USS, which are listed below with evidence:

1. Negligible deficit and lower future service costs: Even by USS’s highly contested valuation methodology, the USS June 2022 monitoring suggests the fund is now in surplus and requiring only 20.9-21.2% total contributions to continue to fund the current reduced level of benefits. Even without the April 2022 cuts the fund would remain in surplus and require total contributions in the low 30%s. A graph and spreadsheet show the June monitoring surplus with and without cuts. The results have been reproduced and verified independently by Michael Bromwich, Professor of Accounting and Financial Management Emeritus at LSE, who has estimated here, from the June monitoring, the increase to future service costs with restored pre-April 2022 benefits as an update to his article ‘Time for Agreement’.

2. Many employers want to improve benefits as soon as possible. Through public statements alone, 32% of USS institutions (weighted by USS contributions) have already called for any upside to be prioritised to improving benefits, while 22% have already publicly called for this to be as soon as possible, for example through a change to the schedule of contributions based on an intermediate valuation in advance of a formal valuation. 

3. UUK can consult rapidly on unusual arrangements, and their aspiration for a ‘fast-track’ 2023 valuation is in opposition to earlier claims. UUK claim they want to ‘deliver positive changes for scheme members as quickly as possible’, but are not considering the option of an interim restoration of benefits, which is within the power of the JNC. Instead they expect to be able to ‘fast-track’ a 2023 valuation, in spite of having previously claimed that it would be extremely challenging to fast-track a 2022valuation when UCU called for one in January 2022. In addition in September 2021, UUK consulted on and endorsed a highly unusual change involving a complex dual schedule of contributions and expedited submission of the 2020 valuation. This consultation lasted only one week but resulted in a new schedule of contributions and recovery plan that delayed deficit recovery contributions. So a precedent has been set for rapid consultation on a proposal that includes delaying or changing the structure of deficit recovery contributions.

4. USS is no longer nationally competitive. USS has now fallen so far behind public sector pensions that the value of the pension it provides is well below half the value of the Teachers’ Pension Scheme.
5. UUK consistently underestimated the level of cuts. UUK seriously and repeatedly underestimated the level of cuts through consultations as demonstrated in ‘The distribution of loss to future USS pensions due to the UUK cuts of April 2022’ which analyses the cuts using only the UUK Heat map and the USS modeller.

6. UUK consultations are viewed as flawed. The UUK consultation process was widely and credibly viewed to be biased against UCU’s proposals that would have prevented the cuts. Sam Marsh and Mike Otsuka have written repeatedly on this, for example here on UUK’s escalating misrepresentation of UCU’s proposals (Pt II), here on the delay in consulting, and here on the double standards applied to UCU and UUK proposals.

As you can see, the evidence shows that the situation has changed enormously over the past two years. We believe that vice chancellors have a duty to reconsider their position in the light of that and to restore benefits while a new valuation is carried out. We understand that the UUK annual conference is taking place 7-8^th September in Leicester, and we hope that you will use this information to inform your responses during any discussions on USS which takes place. This branch would like to be able to say that our vice chancellor, as an influential leader in UUK, led the way in ensuring that staff at this university were protected in their retirement and not left to face financial hardship in retirement.

We look forward to receiving your reply.

Southampton UCU Executive Committee