UCU members in their tens of thousands have voted overwhelmingly to move forward with pension proposals agreed with employers which will pave the way for the restoration of benefits. When we launched our pensions dispute, university vice chancellors doubted us, and government ministers criticised us. We were told it was impossible to win back a stolen pension but today UCU members have proven that it can be done, and we have taken a giant step towards a historic victory that will change lives.
So Jo Grady, the UCU CEO announced the end of a long running industrial dispute over the pension promise from Britain’s largest funded pension scheme.
Anyone arriving fresh to the scene will find it hard to believe that a 35% cut in deferred pay could have been put forward by employers of university teachers and research staff. That within two years, that pay cut has been reversed and the future promise restored is hardly less credible. Most incredible of all, anyone fresh to the USS but familiar with their own UK pension , will know that pension schemes had a hard time of it in 2022.
Those closer to the coalface, namely the staff impacted by the cuts had to call upon other academics to reveal just what was happening to their pensions. Last summer, analysis from Cambridge, Edinburgh and Sussex universities, and the Helsinki Institute of Physics showed that younger workers could have lost up to £200,000 under benefits changes introduced in April. This is why Jo Grady referred to “stolen pensions“.
A promise of future benefits is a promise. It should not be conditional on the desire or ability of those making the promise to meet it, that should be taken as a given when the promise was made. That in this case, the promise was made by UK universities, organizations with rich histories and immense endowed wealth, makes it less likely for a teacher or researcher to doubt it.
Rather than taking the long view , the employers took the view of the executive and trustees of USS who took a very short view on the funding of future pensions. They chose to trust a valuation of scheme assets and liabilities in 2021 that had been carried out at the height of the pandemic uncertainty in March 2020. This valuation revealed a £14bn deficit. Two years later and less than three years after the previous valuation point , the head of the UK’s Universities Superannuation Scheme (USS) said the latest report on USS’ cost – which shows a £5.0bn surplus – allows “cautious optimism” regarding the upcoming triennial valuation.
There are many aspects of the USS’ management that have been called into question. The management of the USS asset base explored by Con Keating in a recent article published here which concluded “It is absolutely clear that this USS model is not in any way fit for the purpose stated”. Likewise, the dismissal of whistleblower Jane Hutton in 2019 who correctly predicted what was to come. Add to this the high cost base of the USS executive and its capacity to antagonize its membership and you get a perception of a poorly run pension scheme that did not exhibit economies of scale so much as economies of competence.
But none of these things is so relevant as the observation that in less than three years, over a period of poor economic performance and great social turmoil, the funding of USS notionally increased by nearly £20bn. This really stretches credibility and suggests that until the scheme’s valuation methodology is righted, the capacity of future valuations to reopen the same disputes remains.
Not all actuaries accept this state of affairs. Mike Harrison reminds us that a casualty of the strikes has been the promise of education young people have paid for, that has been only partially delivered. For a generation of students, there is no restitution.
— Henry Tapper (@henryhtapper) April 18, 2023
The University and College Union has every right to be proud of itself for standing up for common sense and its members future pensions and UUK , bruised as it may be, should now accept that it fought its staff with arguments based on faulty assumptions.
But those assumptions were provided them by the USS, a pension scheme established under trust for the benefits of its members. It does not make common sense that it has been in dispute with those it has a fiduciary duty to.
The trust of the members in the management and trustees of its pension scheme has been damaged and needs to be repaired. There must now be an acceptance from the USS executive that their needs to be a material change in the management not just of the scheme assets, but of stakeholder relations.
The USS must be run in future with common sense. It must ditch its blind adherence to financial economics and remind itself that – like the staff and institutions it serves, it isn’t closing any time soon.
Some of us remember how retirement benefits were “secured” on endowment policies with companies such as Equitable
Would you add to your schematic the protection funds roll.
Are the Bursars at Oxford and Cambridge still thinking of setting up their own scheme?
That is an important step but the benefits cut have not as yet actually been restored.
Well done all involved.