To inform debate at UUK’s annual conference, 7-8 September 2022
Earlier this summer many UCU branches, including ours, signed joint statements with their leadership teams on USS. Most of these statements called for rebuilding of trust or emphasised the importance of an evidence-based approach to communications.
In this spirit, ahead of the UUK’s annual conference at the University of Leicester, 7-8 September [1], we have summarised six important and timely facts on USS, presented without opinion, and backed by evidence.
We hope that all Vice Chancellors will read this short summary carefully in preparation for the UUK conference. Our aim is to inform their debate on USS at a time where trust is at rock bottom, so that university leaders are best able to collectively use their influence and power to seek a way forward.
Locally at Sussex and the Institute of Development Studies the six key facts below are especially relevant to the first point in both of our joint statements on USS:
We will encourage UUK to engage with USS to explore benefit-enhancing solutions short of a full valuation which might take the form of a change to the schedule of contributions based on an intermediate valuation in advance of a formal valuation.
Six important and timely facts on USS 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 2022 valuation 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 SoC and Recovery Plan that delayed DRCs. So a precedent has been set for rapid consultation on a proposal that includes delaying or changing the structure of DRCs.
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) and here on the delay in consulting, and here on the double standards applied to UCU and UUK proposals.
Jackie Grant and Jo Pawlik
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[1] UUK’s website makes no mention of the UUK annual conference, but colleagues at the University of Leicester have confirmed the event, and one of the exhibitor’s websites includes the following information:
The Universities UK Members’ Annual Conference is the flagship event for vice-chancellors, sector leaders and stakeholders. This event gathers together Vice-Chancellors and Principals from universities from across the UK, along with other senior university staff for the second day. We also welcome leaders from a wide range of government departments and sector bodies, as well as international higher education representatives.
The Universities UK annual conference 2022, accessed 26 August 2022