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.

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

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.

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.