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Initial views on the USS 2020 valuation and the UUK consultation


Sussex and IDS UCU Pensions Working Group is seeking input on initial views outlined here. Following your input we will prepare a more detailed response to share with Sussex and IDS institutions before the deadline of 24 May for the Employer's response to the UUK consultation. Please check your inbox for emails with the subject heading ‘USS Pension - your input needed!‘ or contact ucusussex@sussex.ac.uk for details of office hours, meetings and other ways you can input.


Our views


The USS 2020 valuation is not fit for purpose, the governance of USS is also not fit for purpose and the behaviour of the Pensions Regulator is at odds with its remit.


The situation has changed considerably since 2019 when UUK had ‘full confidence in the way the giant USS scheme was being run’ FT, July 2019.


In March 2021, UUK publicly wrote to USS calling for a review of the valuation, describing the valuation as ‘unjustified’, ‘unnecessary’, and ‘unaffected by the evidence presented’. The actuarial report by Aon for UUK describes it as ‘misleading’ and a ‘hall of mirrors’. In writing to the Pension Regulator UUK state ‘we are particularly concerned about the influence of the Pensions Regulator on the USS Trustee’ and ‘we have seen little evidence to date that there is focus on your statutory objective’. The UUK consultation document explicitly states that ‘scheme governance is long overdue a review’.


USS Trustee, which has total power over the £80 billion in assets of the University sector pension fund, responsible for the pensions of over 460,000 people has refused to conduct a review as requested by employers and employees as represented by UUK and UCU. This lack of accountability is part of a larger picture, as outlined by Neil Davies, in the USS Trustee’s governance crisis.


So UUK are now consulting employers on a substandard valuation.


Where does this leave the University community?


All USS Defined Benefit pensions accrued to date are guaranteed, firstly by the collective strength of the HE sector and then by the Pension Protection Fund. However, as explained by Sam Marsh, the USS Trustee has forecast such ridiculously low asset returns that a shortfall of between £15-18 billion is estimated. The approach adopted by the USS Trustee appears to involve reverse-engineering excessive prudence.


So the USS Trustee is now claiming that either huge contributions or hugely detrimental benefit reductions are necessary. The claims have been met by widespread public criticisms, and are considered ‘misleading’ by all stakeholders. The proposed contributions are all unaffordable, and there is widespread agreement, including from Mike Otsuka, that the UUK proposal to cut benefits are ‘insulting and provocative’ as described by Jo Grady, UCU General Secretary. The UUK Aon proposed structure is a more expensive version of a proposal made in 2018, implementing a significant deterioration in pension benefits. This proposal should be rejected on the grounds that no one should agree to have their pension devalued by 21% as a consequence of a valuation that all parties agree is not fit for purpose.


The statements on ‘flexibility’ to address the 15-20% opt-out rate are at best hand-wavingly vague, with even the UUK consultation stating it ‘is difficult to see how the tiering system could operate’ given the results of the valuation.


We do not see how it is possible to be consulted on aspirational non-solutions.


And what can we collectively do?


If you are a USS Member or eligible to be a USS member you can share your views. You can do this in two ways.


Staff at IDS can input directly through the meetings and open consultation, and IDS staff will be emailed separately with updates about consultation at IDS.


Staff at Sussex can respond to the University of Sussex survey, referred to by the Sussex VC, that will run between 26 April and 7 May. We understand that this will be based on the UUK Template Employee survey, a copy of which we have obtained. This UUK template omits any questions on governance reform, covenant strength or conditional indexation and does not provide any space for free-form text. Many of the questions on ‘value’, ‘flexibility’ and ‘concerns’ are open to misinterpretation, or else are highly leading. For example 'Do you consider the promises provided by the Defined Benefit* part of the scheme (the USS Income Builder) to be worth retaining going forwards, regardless of the cost to you? '. Sussex UCU has raised concerns about the limited nature of the template survey and has asked for more information about how this data will be reported. We will continue to ask for sight of the employers responses, which are uniquely refused at the University of Sussex.


Secondly everyone is invited to share views with the Sussex and IDS UCU pensions working group.


Where to start in forming your views?


We are fully aware of the overwhelming complexity and the limited time available for people to commit to forming views. On top of the USS 2020 valuation documents, the UUK consultation documents alone are over 200 pages long. In addition, many of these documents are unnecessarily complex, obscure and misleading. There is considerable work involved in cutting through the nonsense to the small amount of useful but disjointed information.


We don’t expect USS members to have time to unpick the details, and even with the support of UCU and other pension reps, we are struggling. However we do want to talk to you and hear from you all. There does need to be further action on USS. In addition to your views on USS and the valuation, we need to know what kinds of action you would support.


Please check your inbox for emails with the subject heading ‘USS Pension - your input needed!‘ or contact ucusussex@sussex.ac.uk for details of office hours, meetings and other ways you can input.


Sussex and IDS UCU Pensions Working Group


The Institute for Development Studies (IDS) is a Research Institute affiliated with the University of Sussex and located on campus.


Photo credit: John Weiss



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