Oh No, Not Pensions Again!

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!

What Happened To The Four Fights And USS Disputes?

Given the scramble to make sense of the radical changes to our operations and the attendant destruction of our terms and conditions of employment, you could be forgiven for forgetting that it was only a few weeks ago that we concluded our industrial action on the 4 Fights and USS disputes. For those who have forgotten what the two disputes were about, let’s remind you.

The Disputes

The USS dispute reflected ongoing issues which were not entirely resolved by our strike in 2018, when we managed to get the employers association, Universities UK (UUK), to back down from their plans to end a defined benefit scheme. An update on this dispute from early May is available here.

The Four Fights dispute combined a number of issues handily outlined on this graphic.

Ballots for action were taken at the institutional level, as it was thought this was the best way to meet the legal requirement for a 50% turnout. Around 50% of UK universities, including RHUL, then took part in 22 days of industrial action before Christmas and again in spring term. Action Short of a Strike (ASoS) continued at RHUL and many other institutions until the end of April, though ASoS remains in place in institutions who joined that action during the second round of ballots.

Offers Or Not

Discussions with UUK to resolve the pension dispute have not culminated in an offer. Progress has been made in terms of greater cooperation between UCU and UUK in pressing USS to drop Test 1, to look at the cost and benefits of de-risking and to elicit greater information sharing. However, there is no offer to reduce members’ contributions or for employers to absorb some of their burden (in recognition of the past payments holiday or the strike action required to save defined benefits). To be clear, there is no offer from Universities UK (UUK) on the table with respect to the pensions issue.

There is an offer with respect to the Four Fights. Discussions with the University and College Employers Association (UCEA) were unexpectedly halted due to the coronavirus, with some anticipated marginal gains disappearing and taking us back to the earlier offer. Members should note too that the negotiations for the 2020/1 claim should have started by now, but these have been postponed for the same reason. The final offer from UCEA does not improve on the (imposed) average 1.8% pay increase. However, it offers local level work to make improvements in the three other areas: national frameworks for looking at and generating data on pay gaps, for discussing workloads, and to explore scope for reducing casualisation are proposed. Data and best practice would be shared at the national level, to stimulate wider work in these areas. There is to be no money for the frameworks or sanctions for institutions who do not engage in joint work on these issues.

The Higher Education Committee (HEC) of UCU had originally planned to re-ballot for continued action in March 2020 but this was scrapped due to the corona crisis. As it stands today HEC has decided there should be re-ballots on both issues starting either on 30th June or as soon as practically possible after that date. Continue reading “What Happened To The Four Fights And USS Disputes?”

A letter to the Principal about USS

Last month, our branch vice-chair wrote to the Principal of the college to ask him to take action in the current pensions dispute. We still have not received a response. We thought we would share the letter here so our members are aware of the issues that are at stake in the current ballot on strike action over USS, and to let them know we have tried to raise these issues with the SMT.

As branch members were reminded yesterday, we strongly encourage you to vote so we can reach the 50% turnout required; if you don’t vote, then you risk disenfranchising your colleagues. Please do get those ballot papers to the postbox!

Continue reading “A letter to the Principal about USS”

Notes from the UCU General Meeting, 2 October 2019

We will be circulating the full minutes of our most recent meeting to all members shortly, but in the meantime, here’s a selection of highlights.

Motion on Climate Action

As you may know from previous blogposts, RHUL performed very poorly in the People and Planet League table released earlier this year. In addition, the Students’ Union set a good example for us in May, when they passed a resolution to recognise the climate emergency. There is an urgency for the branch to act on this issue, since there is a council meeting on 9 October, with environmental matters on the agenda. An extensive RHUL-UCU motion was proposed, listing out a set of beliefs, and resolutions (sent out to all members via e-mail). Key points include reducing high-carbon foods and banning single-use plastics on campus wherever possible. The motion was carried by a large majority, and will now be sent on to be included in the papers for next week’s Council meeting. The ultimate aim is to get this included in the College’s updated environment strategy, which will set the plan of action for the next ten years.

Ballots and Get the Vote Out

Debbie Driscoll, our Regional Support Officer, visited us to give a talk about the simultaneous ballots that are currently running: one on USS, and the other on pay and equalities. Both of these ballots are disaggregated, meaning that we as a branch need to secure 50% turnout on both in order to be included in any strike action.

USS Ballot

The USS ballot is in response to the recent negotiations between UUK, USS and the proposals by the agreed JEP. UCU accepted the JEP report and in their entirety; we are unhappy that USS rejected the report and that USS won’t hold them to account. Currently, employers are forcing USS members to pay towards contribution increases – 9.6% from Oct 2019, and 11% in Oct 2021. This has come about from USS’s refusal to implement the JEP’s proposals, despite what was agreed at the end of last year’s strike action. It is estimated that under current plans, the average USS member stands to lose £240,000 in retirement (as a result of changes made since 2011). The USS ballot aims to:

  • Insist that USS should cover contribution increases
  • Insist USS should implement JEP’s proposals
  • To hold USS to account

Pay and Equality Ballot

Staff pay has been seriously eroded over the last few years. Spending on staff in UK universities has fallen by an average of 58% down to 54%. Our salaries are now worth 20% less than they were 10 years ago. Employers have only offered a below inflation pay increase of 1.8%. In addition to all this, we all know the stress of academic workload: the average working week is above 50 hours (with 29% of academics working more than 55 hours per week). Job insecurity is endemic, with over 100,000 teaching staff in HE on casual contracts and zero-hour contracts. In many cases, cuts on staffing costs are achieved by increasing the numbers of casual staff. We also have a severe gender pay gap at RHUL, as well as a pronounced pay gap for protected characteristics, as we have written previously on the blog. The pay and equality ballot is a joint trade union claim with Unison and Unite. The claim proposes the following:

  • A pay rise of RPI + 3% or £3,349, whichever is the greater
  • £10ph minimum pay
  • 35 hour working week
  • A commitment to close the gender pay gap and take action on ethnic pay gap
  • To agree framework to eliminate precarious contracts – move to fractional and end outsourcing
  • Nationally agreed payment to recognise excessive workloads

The biggest concern is to achieve a good turnout well above 50% so that we have a strong negotiating position. Remember: the bigger the mandate for strike action, the better the outcome.

Local Arrangements to Get the Vote Out

A lot of the GTVO focus falls on departmental reps. Priority is direct human contact– to press the members in your department to ask if they have voted in the ballot. In some departments (especially large departments), this can be very difficult, and some reps may find this hard owing to their individual circumstances (fractional contracts, etc). In such cases, branch committee members are happy to visit departments and assist. Reps can contact members by telephone if they are unable to knock on doors.

Visibility is key – for members to put posters up, to wear their ‘I voted’ stickers, or place them around their buildings. Especially, please remind members of the address they need to go to if they need to get new papers (especially following the shuffling of school-ification, where many members have changed their work location). If you have any new staff in your department, please encourage them to join and then vote – there is still time!

Deadline to get your ballot papers in is 30 October, but the post deadline is 28 October.

AOB

Other issues raised included ‘fact-checking’ college emails from senior management, as well as queries about Royal Holloway’s track record of decreasing staff costs in favour of increasing spend on new buildings. Check your inboxes for the meeting minutes for further details!

Do you value your USS pension?

Recently UCU reps in this region met to discuss the implications of the Congress decision to ballot for action over ongoing threats to our defined benefit pensions, the Universities Superannuation Scheme or USS. Some of you might want to know how we ended up back here, worried about industrial action and “paying more, for less, for a longer period” to get a satisfactory pension. So, let’s have a brief recap.

In spring 2018 UCU took unprecedented industrial action which, with the support of students, alumni and other parties, resulted in USS withdrawing their plans to move us all on to defined contribution pensions. The estimate of the average loss from such a move was £200,000 over retirement. Yes, that’s right, they wanted to impose on us a loss of £200k! Members and employers agreed to establish an independent body to look at the position and future of USS, the Joint Expert Panel (JEP), so we all went back to work hoping this matter was concluded.

At various meetings and via this blog, we have highlighted that the managers and trustees of USS has not been open to recommendations from the JEP. The JEP’s first report looked at issues around the 2017 USS valuation and made four specific points, but USS has chosen to be selective in accepting their recommendations. In doing so they have claimed that higher contributions are needed to guarantee our current pensions –  contributions which we, on vastly reduced real earnings, can ill afford. The higher contributions also imperil the real estate priorities of our employers, so one imagines they would be keen to avoid them too. Had the JEP’s suggestions been adopted, no increase would have been required. So, whilst one might assume neither employees nor university employers want to pay more, the balance of power on the Board of USS means the employer is in a stronger position to call for adoption of the JEP’s recommendations than UCU.

Governance concerns about USS are significant. We have outlined these in meetings and you can read about some of them here and here. No doubt a future blog post will discuss these again. But, as the balance of USS decision making lies with our university, avoiding further conflict is in their hands.  We call upon our Principal, a member of the Treasurer’s Committee of UUK, to press for a full acceptance of the JEP’s recommendations. There is precedent in employers and employees collaborating to work together to secure the USS pension scheme, and precedent in challenging the operations of USS, as this letter to the JEP from Sheffield University indicates.

Given the continued threat to our pensions, unless our employers press for changes in USS’s approach, we will be balloted for industrial action in September or October. Luckily our Branch agreed to increase local subscriptions, for the highest paid staff, so we can replenish our hardship fund. This proved vital in supporting insecure staff who wanted to take action in 2018.

There a lot to take in to understand pensions. Given the behaviour of USS some of you may be asking, “why should we be angry at our employer rather than just with USS”? Here are a few reminders:

  1. Employers called for the de-risking strategy of shifting investments from equities to gilts – resulting in decreases in “real” returns.
  2. Senior figures in UUK suppressed the Pension Regulator’s letter, from December 2018, in which they criticised USS for misrepresenting their position on managing USS.
  3. Accepting any of the three options USS presented is clearly unnecessary and employers should have challenged them. Some are using the higher contributions to justify restructuring and redundancies – policies which hurt the student experience.
  4. As contributions rise, insecure staff are struggling to remain in the scheme – this has serious equalities implications.

The USS was originally established since one of UCU’s parent unions, the Association of University Teachers, wanted to ensure university staff were not palmed off with defined contribution pensions, with all the risk these entail. Let’s make sure this objective is not lost!

Look out for more on this issue from your Branch Committee.