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EGM to discuss outcome of HE Sector Conference and the USS dispute

There will be an on online HWU Branch members extraordinary general meeting at 12.30 on Thursday 23 September 2021 to discuss the outcome of HE Sector Conference and the USS dispute. To join the meeting please use the Zoom link which has been sent to all HWUCU members by email. If you require a reminder, please contact Juergen Munz at Juergen.Munz@hw.ac.uk.

If BSL interpreting would be of assistance to the meeting please contact the on-campus BSL interpreting service (marion.fletcher@hw.ac.uk ) directly to arrange this.

Pay and 4 fights

The annual pay bargaining has now closed without a resolution. A derisory pay rise of 1.5% has been imposed by employers without UCU agreement. No further progress has been made on pay gaps, casualisation and workload other than the usual offer for more working groups. Therefore with the USS situation at a critical point for the future of our pensions and no resolution on pay it is likely that we will be balloted on both.

The USS dispute

The UUK proposal has been voted through by the UUK JNC representatives with the Chair’s casting vote. This proposal if not revoked, will see a significant cut to our future guaranteed pension accrual *of at least 12%*, probably more like 23% once indexation is factored in.

What changes are being proposed to your pension?

In March 2020, the USS Board who oversee the Universities Superannuation Scheme, conducted a valuation of the pension scheme – a time when global financial markets were at a deep low. This valuation (the 2020 valuation) estimated that the USS scheme carried a projected deficit of between £9.4 to £14bn, with the USS trustees later arguing the deficit could even be as high as £17bn. The valuation was shared with Universities UK (UUK; the organisation that represents employers) and UCU.

Sam Marsh, one of the UCU negotiations at the JNC called for more information on the methodology used in the 2020 valuation but was denied. Marsh has since conducted his own analysis which can be found at https://medium.com/ussbriefs/how-extreme-prudence-and-misguided-risk-management-sent-the-uss-into-crisis-baf78c35d9e1

In short, he argues that 2020 valuation is overly-prudent.

What is important here is that each assumption being made by USS’ actuaries will impact on the level of cost and benefit in the scheme. The USS Board are obliged by UK pension law to choose prudent assumptions in determining future costs in a pension scheme, and more pessimistic assumptions (i.e. assumptions that are more prudent) will result in higher costs and lower asset values. The USS Board changed their valuation methodology and definition of prudence specifically for the 2020 valuation and has not yet fully and transparently disclosed the justifications for these changes, save for a brief response comparing the general changes in prudence from previous valuations.

Negotiators representing UUK also demand more transparency regarding the 2020 valuation.

In March 2021, the USS Board presented their own proposal which we have shared with members before. For reference the current contribution to the scheme is 30.7%: members (you) pay 9.6% of your salary, and employers pay 21.1%. In order to keep the current package of defined benefits in our post-retirement income, USS proposed that the lowest contribution rate they were prepared to accept was 42.1%, which would be split roughly one-third by members (you) and two-thirds by employers.

This was rejected by both UCU and UUK as being too costly.

UUK have since accepted the contentious 2020 valuation and have made their own proposal on benefit reform and cost sharing, which was accepted by USS and a new USS-UUK agreed cost sharing proposal was considered and shared with UCU.

How has UCU responded?

UCU has disagreed with the 2020 valuation, maintaining that the deficit has been exaggerated because of inaccurate technical assumptions, and that the valuation was conducted when markets were suffering from the immediate shock of the Covid-19 crisis.

Indeed, when the valuation was conducted, scheme assets were estimated to be £66.5bn, but as recently as 31 July 2021, the USS own monitoring dashboard valued the assets at £87.8bn. This represents substantial growth over the last 15 months, challenging the pessimistic and overly-prudent assumptions of the 2020 valuation.

UCU negotiators on the JNC have cited this growth in assets and have asked for USS to conduct a March 2021 valuation, but have been denied this request. The USS Board have repeatedly claimed that a 2021 valuation is not possible, and the USS Board have maintained that if a 2021 valuation was to be done the outcome would be the same.

Instead, USS accepted the UUK proposal and have supported this. The UUK proposal is focussed on cost cutting and reducing the benefits owed to members (you).

UCU negotiators through July and August proposed different ways of cutting costs and ensuring existing benefits could continue to be delivered to members. UCU negotiators also highlighted how the UUK proposal would contribute to a worsening intergenerational fairness, creating in effect a two-tiered pension scheme that reduces guaranteed defined benefits for all members enrolled in the scheme.

UCU negotiators tabled their own counter, but UUK cited procedural issues and refused to extend support to the UCU proposal and did not recognise the UCU proposal as being a formal offer at the negotiations. This, instead, ensured that the only proposal under discussion for employers and members was the UUK proposal. One of the UCU negotiators has written about this refusal to acknowledge the UCU proposal here.

In August 2021, the final JNC session to discuss the UUK proposal was held. In that meeting, the voting was split – the independent chair appointed to the JNC voted in favour of the UUK proposal. This means that we are now faced with cuts to our post-retirement, higher contribution rates, and an overall degradation to the defined benefit element of our pension.

Despite previously disagreeing with the USS Board’s very pessimistic (and despite the scheme enjoying significant asset growth since the 2020 valuation), UUK instead has signalled with their proposal that employers are not willing to support the existing levels of defined benefits. Pensions are our deferred wages, and employers by accepting the UUK proposal, are now content to cut our own entitlement to our own deferred wages. This on the back of several years of real terms pay cuts and growing casualisation across the UK Higher Education sector comes to some as a real slap in the face. Especially when some employers saw fit to cut jobs and embark on redundancy schemes when staff had over-worked to ensure universities continued to run smoothly during the pandemic. You will recall we faced those very same challenges last year.

UCU nationally has called for action on pay and pensions, with both issues being recently discussed at a specially convened conference last week (the Higher Education Special Sector Conference, held on 9 September 2021).

Further Information

We also highly recommend you watch the following short videos from the recent UCU Solidarity meeting where UCU pensions experts explain different aspect of the USS scheme in small bite size chunks.

Part 1: USS basics

Part 2: The current valuation

Part 3: Is there an alternative

Part 4 and 5 to follow shortly.

What can you do?

  • Check your membership details are correct (and consider adding your mobile phone)
  • When you get your ballot paper- vote!
  • Come along to the EGM
  • Talk to your colleagues- if they are not in UCU they need to join and fight to protect *their* pensions. They cannot keep relying on others to do the fighting for them. Since we protected the USS scheme in 2018 they have already received an additional guaranteed annual income in retirement equivalent to 1/25th of their annual salary that they would not have got had it not been for UCU members.

Finally, at the meeting we will be voting on a motion to call for a Special Scottish Conference on Covid. We hope all staff are well and safe and able to work in a way that protects their own health and that of their loved ones and community. However, we have concerns about the way that H&S is being handled at HWU and this is shared across many other institutions. If you have specific concerns or queries related to return to campus then please contact us and come along to the EGM.

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