Feelings are running high, union warns, with more than half of UK academics on short-term contracts
See the full article in the Guardian
Carlo Morelli from last week’s UCU Left conference
Importance of USS ballot
USS – explained!
Strike Fund support
Access to UCU’s fighting fund will be changed to enable better support for members in the event of strike action being taken as a result of the USS industrial action ballot, UCU general secretary, Jo Grady, has announced:
Strike fund support
Possibility of USS trustee legal action
UCU general secretary Jo Grady has announced that UCU is pursuing investigation into the possibility if legal action against USS Trustee Ltd after a leading pensions QC found that there are grounds to proceed on the basis of breach of trust.
Possibility of USS legal action
New USS Brief — reasons to vote YES
Please see below for a clear explanation as to why it is essential to return your ballot paper with full YES votes in defence of your pension. (Sam Marsh is a UCU negotiator on the JNC.)
Why it is essential we vote YES
The promise to implement the Joint Expert Panel’s decisions as the basis for ending industrial action has been betrayed by your employers as they circle wagons to protect the USS patriarchy. Only a renewed threat of action will save your pension.
If you are expecting a ballot paper and have not received one then please let the UCU office know.
USS Jargon Buster
If you are baffled and exasperated by the terminology or need a concise key to the dispute about your pension, read on.
Contribution rate: The proportion of your salary that goes into the pension scheme, coming from the employer and from you.
Deficit: Despite headline-grabbing ‘deficits’ in 2011, 2014, and 2017, USS is growing, making an annual surplus and currently has massive assets, £72bn of late August. The deficit is a hypothetical calculation based on assumptions that the USS executive has manipulated to its own ends. If the Joint Expert Panel recommendations were applied to the March 2018 valuation, the deficit would vanish.
Defined Benefit or DB: how most pensions used to be. You and your employer pay in during your working life, you know what proportion of your salary you will receive on retirement. These are mutual or collective schemes. There are currently still 10 million people in a DB scheme. The pensions industry and its regulator want to shift risk and costs of pensions onto individuals so they are keen to move people onto Defined Contribution schemes. Final Salary Defined Benefit schemes calculate your pension on your salary at retirement. Career Average Defined Benefit Scheme averages your salary over time to determine your pension.
Defined contribution or DC: how pensions increasingly are. You know how much you pay, you have no idea what your pension will be. You accumulate an individual pension pot of shares, which you receive on retirement. At retirement, you would have to buy an annuity, which would provide you with a regular income (so it is in the interest of the pensions industry to get people onto defined contribution pensions).
‘De-risking’: USS, the Department of Work and Pension and the Pensions Regulator are ideologically committed to ‘de-risking’: moving high yielding equities into government bonds or ‘gilts’, thus weakening performance of the scheme and in-creasing deficit, creating more pressure to move to a DC scheme or increase contributions.
Employer Covenant: The: a credit rating based on a subjective assessment of the employers’ commitment to the pension scheme. Because the USS is backed by multiple employers on a last-person-standing principle it has a uniquely strong employer covenant. The ‘deficit’ jumped from September to November 2017 after a consultation in which employers were asked what their ‘appetite for risk’ was by USS to which they replied that they did not like risk. Consequently, the pension’s regulator deemed the covenant to be ‘tending to strong’ rather than ‘strong’ pushing the ‘deficit’ up.
Joint Expert Panel: this body was established through agreement between the UCU and UUK during the pensions dispute of 2017-8, in order to look at the calculation of the ‘deficit’ (the 2017 valuation of the scheme) and the governance of the USS. It reported on the former in Sep 2018 and it is soon to report on USS governance. The USS executive has effectively ignored the findings of the first report.
Joint Negotiating Committee: The: the negotiating body between the UUK and UCU regarding the USS.
Option 3: Rather than challenging USS to implement the Joint Expert Panel’s recommendations, which, if applied to the March 2018 valuation, would have led to no increase in contributions, the employers opted for a stepped increase in contributions, starting at 9.6% of salary for employees and increasing to over 11% in 2021.
Pensions Regulator: the ‘independent’ watchdog for the pensions industry. But this is a government appointee fully committed to the liberalisation of pensions and has done next to nothing to protect those who have suffered from pensions injustice such as those at Carillion, BHS, British Steel and the Miners Pension Scheme. Bill Galvin, now CEO of USS, was formerly the Pensions Regulator.
Technical Provisions: The technical provisions liabilities must be calculated every valuation (every 3 years) and is a measure of the assets the scheme requires to pay off all its liabilities (i.e. members’ pensions). The estimate depends on life expectancy, inflation, and the ‘discount rate‘. The latter is a major source of contention, with the USS Executive having misrepresented the regulator about this rate.
Test 1: This calculates the assets the scheme will need in 20 years’ time if it is to be closed. The Joint Expert Panel, among others, have debunked Test 1. The Joint Expert Panel report noted that Test 1 drove investment strategy to-wards a low return on investment, higher deficits and greater contributions. Despite being discredited in the Joint Expert Panel, USS used Test 1 in its latest valuation.
USS Executive: The scheme managers who should administer the USS increasingly act in an entirely unaccountable manner. These are finance industry insiders. Bill Galvin, the CEO of USS, is the head of the executive board.
USS Board of Trustees: Because the USS is a mutual scheme set up through agreement between the employers and the union, the board allows for representation for both parties and independent experts. Jane Hutton was recently suspended from the USS Trustees after exposing the fact that the USS Executive had been systematically misrepresenting the position of the regulator on discount rates.
UUK: the university employers’ organisation.
Valuation, 2011: Supposedly designed to protect pensioners from the Robert Maxwell scenario, the pensions’ legislation imposed triennial valuations and has led to one defined benefit scheme closing after another. In 2011, the ‘deficit’ was £2.1bn. Our retirement age raised to 65 and was pegged to the state retirement age. Employee contributions increased from 6.35% to 7.5%. It introduced career average scheme for new entrants.
Valuation, 2014: £5.3bn deficit. From 2016, employee contributions increased to 8% and there was a £55,000 bar upon the final salary scheme, with contributions above this figure going into the Defined Contribution Scheme.
Valuation, 2017: a deficit of £7.5bn. The employers pro-posed a defined contribution scheme.
Valuation, 2020: the scheme is due another valuation ac-cording to the triennial approach
UK universities brace for strike action in pensions dispute
British universities are heading towards strike action later this year, after employers insisted on requiring staff to pay higher pension contributions despite union warnings that the move would trigger a ballot on industrial action.
The University and College Union (UCU) said it had rejected an offer by the employers, represented by Universities UK (UUK), to swap limited increases in staff pension contributions for a two-year bar on strike action.
The UCU will go ahead with balloting its members, including researchers, librarians and other academic staff, from 9 September, which means as many as 69 universities with members in the pension scheme could see strike action in the new academic year.
Jo Grady, the UCU’s general secretary, said university management were expecting their staff to meet more of the cost of pensions because the sector had been unable to control its own spending or curb a building bonanza.
“Step back and look at the wider context of this. Since the financial crisis, the proportion of overall spending on staff in the sector has dropped from 58% to about 54%, and we are seeing a lots of cuts to staff and benefits,” said Grady.
“But the sorts of expenditure we’ve seen at the same time have been capital expenditure, expensive new buildings and foreign campuses, which don’t directly benefit education, research or teaching. In that context, what we are asking for is not unreasonable.”
Grady said her members wanted a permanent solution to the long-running dispute over the structure and financing of the universities superannuation scheme (USS), including an overhaul of the scheme’s management.
“What we are saying is that enough is enough. We tried an interim solution last year and that didn’t work. If we have a vote for strikes this year the aim will be to fix the long-term issues, and not just another temporary fix,” said Grady.
If a strike goes ahead it will be the second over pensions in two years. Last year’s dispute followed an attempt by employers to transform the USS from a defined benefits scheme – which fixed pensions to salaries – to a defined contribution scheme with considerably lower pension payouts for most members.
More than 40,000 staff took industrial action during the strikes in February and March last year. Further strikes scheduled for April would have imperilled end of year exams and graduations, but employers backed down and proposed a joint panel of experts to look at the USS’s structure and valuation.
But according to Grady, little has changed, with USS managers unmoved and regulatory mechanisms meaning that contributions will have to rise in the absence of further agreement.
“We don’t need to be paying this at all. If UUK worked harder to implement the joint expert panel that they signed up to then we wouldn’t be here,” said Grady.
“It’s also a nice fudge that universities don’t have to discuss the massive overspending on vice-chancellors’ salaries that we have seen in the last decade, which is just the tip of the iceberg if you want to talk about misspending in universities over the last decade.”
UCU’s demands are multi-layered, and include a “no detriment” requirement that means that under any changes to the pension scheme its members will not increase their contributions above 8% of salary, as well as reforming the USS’s operation ahead of a new valuation for the scheme required in 2020.
The employers said they made a counter-offer, limiting staff contributions to 9.1% in exchange for the UCU agreeing not to strike for two years. “It appears that UCU’s ‘no detriment’ position means no compromise,” UUK said in a statement, after the union refused to accept the offer.
Adam Tickell, the vice-chancellor of Sussex and chair of the employers’ pensions forum, argues that requiring universities to pay substantially increased contributions would have damaging consequences for the sector.
“Importantly, increased contributions of this scale are simply unaffordable for many institutions, and the inevitable result would be redundancies, increased workloads, and reduced investment in our facilities,” Tickell recently warned.
Grady said the union would not give up its right to take action ahead of the crucial 2020 valuation, which could cause a repeat of last year’s strike if not resolved.
“This was a bully clause, plain and simple. Employers wanted to silence dissent from staff for more than two years. Their thinking is clear: they know contributions are scheduled to go up even more at the 2020 valuation and they will try to cut benefits as a result. They don’t want staff to be able to protest that,” Grady said.
USS member satisfaction plummets
With more strike action potentially looming in the autumn, it has been reported today that member satisfaction with USS has plummeted.
The annual report from the Universities Superannuation Scheme (USS) says that less than a third (31%) of members reported a positive relationship, compared to 38% in 2017/18 and 53% in 2016/17. USS dropped its target of members reporting a positive relationship with the scheme from 70% last year to 50% this year, but was still some way short of achieving its goal.
Unlike previous years, this year’s report does not include figures on member satisfaction. Last year less than half (48%) of members said they were satisfied with the scheme, a considerable drop from around two-thirds (66%) in 2016/17.
UCU general secretary-elect Jo Grady said: ‘It has been clear for some time that USS has lost members’ trust and that it has taken the annual report to alert those leading the scheme to this fact suggests they are worryingly out of touch.
‘Considering the complaints around governance this year, we are extremely concerned that USS appears to be cherry-picking what statistics to include in the report. Why are the member satisfaction figures missing?’