Once again, our USS pension scheme is threatened by a manufactured crisis!
The University Superannuation Scheme (USS) had £67 billion in assets in the 2019 valuation.
The facts are that, on a ‘pay as you go’ basis, the USS Pension is firmly in surplus for the foreseeable future. However, the Scheme is required to value liabilities on an assumed interest rate that follows government bonds, and so is close to zero. So, on that accounting basis (and that basis alone), the scheme is in deficit. It is a mathematical artefact that comes about by dividing any sum, no matter how small, by zero – it becomes infinite. Hence the Scheme future calculated liabilities explode while the assets are fixed at the current market value. In reality, our current pensions (and indeed the final salary linked ones promised when most of us joined the sector) are affordable.
Following a scheme revaluation which USS chose to undertake in March 2020, USS is calling for a rise in combined employer and worker contributions to AT LEAST 49.6% of payroll. Yes, that was actually 49.6% of payroll. Despite two reports from the Joint Expert Panel, created to review the workings of USS after the 2018 strike, USS still adopts an approach which employers, the union and the independent work of the JEP all consider to be too conservative and counterproductive.
The appropriate accounting device to ‘make whole’ the zero-interest rate accounting device imposed on USS by the Pensions Regulator is to have university accounts go up and down to make the adjustment. In 2019, the College accounts showed a pension provision of £31.1 million to cover an accounting adjustment. It’s not real money, but an accounting device. In 2020, the College accounts showed a pension provision of negative £19.4 million so that the College showed a surplus overall of about £14 million. These shifts occurred throughout the sector and reflect a difference between the cash flow surplus of USS and the accounting deficit. Not real money.
For these reasons there is no case for cutting benefits at all. This time Universities UK (UUK – who represent employers in the pension scheme) and UCU are united in their rejection of USS’s proposal to raise contribution rates. The VCs of both Oxford and Cambridge have sent joint letters with their UCU branches to challenge the “flawed” approach of USS. This unity is extending across the sector. There is no need this year for any cut in benefits or increase in staff pension contributions.
At this branch and throughout the sector, UCU looks forward to working with Vice Chancellors to come up with a sustainable approach to maintaining our current pension benefits. The RHUL branch is encouraged that the Principal has already reached out to us, in line with the February 4th call from the UCU nationally for VCs and local branches to work together to retain our current USS pension benefits.
Keen to know more? If you signed up for the USS scheme webinar last week you could be as disappointed as a certain RHUL-UCU Branch officer. Questions for the USS CEO and Chair had to be submitted in advance and were closely vetted to protect them from probing or criticism. Pensions can be tricky to understand and this year in particular most of us are too busy to engage with a lot of literature about the pension scheme. Dr Sam Marsh, a mathematician from the University of Sheffield and a UCU pension negotiator, has made a series of videos explaining why the scheme is robust and extra contributions are unnecessary. This fifteen-minute film is a good first step; it highlights the incredible asset growth the scheme has achieved, outperforming forecasts from 2008 when university staff in USS enjoyed final salary pensions on a joint contribution rate of 26%, but despite this USS managers have continued to underestimate the scheme’s strength. Marsh also provides further recommended sources on this issue.
UCU Branch reps have begun to hold a series of meetings to discuss how we might resist calls for (unaffordable) contributions. A number of suggestions have been shared, including a legal challenge to USS, joint pressure on USS from UCU and our employers (individually and as UUK) and finally, if necessary, strike action. If you would like to get more involved in activism in UCU, on pensions, workloads, anti-racism and many other fronts, you can sign up for on-line meetings here.
Locally we hope to organise a local meeting shortly to discuss USS, with a UCU elected official who specialises in pensions, so look out for an email with details soon.
Posted on behalf of members of RHUL-UCU Branch Committee
Reminder: the Branch will be holding a General Meeting on Wednesday 17th March at 1pm – come along to hear about the other work we are doing around health & safety, workload, and plenty more!