I have been impressed by the way academics , through their unions, took on university employers and the received wisdom of the pension industry and refused to let their defined benefit scheme close to future accrual.

I’m pleased that one of the leading lights in their demand to keep USS open was last week elected to General Secretary of the UCU – the university staff union. Congratulations to Jo Grady.

As her twitter header reminds us, the USS dispute has asked fundamental questions not just about pensions but about affordability and groupthink..

Jo’s points are central to the arguments that Hilary Salt and Derek Benstead have been putting forward to UCU. Hilary was quite explicit at the First Actuarial conference in challenging the Pension Regulator’s position on self -sufficiency (since modified to partial dependency). Pension Schemes do not have to behave as if they were insurance companies, unlike insurance companies , they can call upon a sponsor – in the case of USS a sponsor with a history going back 600 years.

Risk can be taken collectively

One of the sadnesses of the University dispute over pensions was that it broke the mutual bonds between trustees, employers and members. Since the dispute we learn that one of the Trustees – Professor Hutton – had to whistleblow to get information from the scheme which she feels would have allowed her to push back against the reckless conservatism of scheme funding.

Now we learn that one employer, Trinity College Cambridge, is seeking to break from USS because it feels too tied by the obligations of mutuality. This too is very sad.

When those who have greatest strength (strength not earned but endowed) , choose to compete rather than collaborate, we see the beginnings of the end of Britain’s academic greatness.

The capacity for risk, that is inherent in our university system, depends on established institutions such as Trinity, enabling new risk-takers to come through. If we lose the solidarity of the pension consensus, we lose much else besides.

A return to good order?

Much has changed in  University pensions, the JEP reported that the information that Professor Jan Hutton had asked for, would – had it been disclosed – confirmed that the USS position on de-risking was unnecessary, that funding of USS need not have increased to the proposed levels, that the scheme was affordable and that the teachers had reason to strike.

Despite the employers (generally) accepting the JEP position, the USS continues to follow the accepted wisdom – espoused in the Pensions Regulators current strategy, that schemes should seek to  be funded independently of employer’s future contributions.

This may work for the PPF – where there is no economic interest in disconnected employer paying levies – but it does not work for the USS, where the bond between employer and staff is to a high degree – through the pension scheme. The principal of deferred pay assumes just that – ongoing employer contributions to USS.

It may be too late to restore the principles behind pensions as deferred pay to the provision of  private sector DB , but it is not too late to save further value destruction in the name of “de-risking”. Indeed there is much to be gained by reintroducing the concept of risk-sharing into pensions – rather than dumping all risk on individuals.

Without the tremendous determination of the UCU, Jo Grady to the fore, the buds of risk-sharing we see in the adoption of CDC by the DWP, would have been frozen.

Better off together

This country funds universities through taxation and  student grants. Universities are able to pursue greater outreach by their entrepreneurial activities – including funding many start-ups that are going on to drive our long-term economic growth. Whether in science, the arts , engineering or economics, we rely on our academics to drive progressive thinking – to be a force for good and to encourage risk-taking.

Without risk taking, the great experiments on which our society is built, would not have happened. Without universities , the science that has driven Britain’s pre-eminence would not have happened. We need to pay our thought leaders to lead and we do not have to make them the CIOs of their self-invested personal pensions.

University academics are no more ready to manage their later life finances than postmen. They are built for better things.

We have trustees a plenty who can manage schemes that give them scheme pensions or “wages for life”.

This is not to discourage those in USS or Royal Mail who want to become pensions experts. Sam Marsh, Mike Otsuka, Denis Leech, Jane Hatton – indeed Jo Grady are all quite capable of managing USS as Member Nominated Trustees. They undoubtedly could run their own pensions but choose not to. They realise they are better off together

As an entrepreneur – I do not need or want to manage my own pension

There are some who argue that their business is their pension, they are taking a great risk relying on their entrepreneurial activities to fund their later life. They are entitled to take that risk – but I am not with them.

I use my endeavours as a businessman to create for myself an income for life and I know that when I have achieved what I want to do with AgeWage, I will be able to move on to a different kind of living – I will call it retirement. Whether I ever get to the point where I fully retire- I doubt – when my father gave up work – he gave up the ghost and I may be like him.

But my father had an NHS pension and I have a Zurich pension and it keeps me going, helping me so I don’t have to drawdown on shareholders funds to meet my financial needs. I am also grateful for the work and pay I get from First Actuarial (including their pension contributions).

To a great degree, the USS are not just struggling for academic staff but for us all. We want to be free – free of financial worries in retirement – for most of us that means having a properly funded pension. Jo Grady and others are holding the red-line for their scheme and raising the bar for the rest of us,