A quick reminder that Leeds UCU has organised an Open Meeting on USS this Thursday (11 March) 12 noon – 1 pm. Please come along to find out what’s going on with the latest valuation. Our pensions rep Mark Taylor-Batty will be expanding on the brief contribution he was able to make to the recent university ‘Conversations’ sessions about USS, and we are keen to discuss this with you. Please encourage your colleagues to attend too, whether union members or not, and please forward this invitation to as many people as possible – thank you.Read more
It is March 2021, and once again USS pension members have been told there is a ‘deficit’ in the valuation of the scheme. USS are planning further contribution increases, going up from 30% of salary (combined total of employer and employee contributions) to potentially 56%, in order to cover this ‘deficit’. This is clearly unaffordable for both members and employers, and would tend to push early career and lower paid staff to opt out of the pension scheme altogether, thus gradually killing what is currently a perfectly healthy pension scheme.
A ‘deficit’ is not an amount of missing money (in fact, the pension scheme funds increased in value year on year this last decade and currently stands just short of £80bn)1 but is instead a calculation of what would be needed in extreme circumstances to ensure payment of all pensions going out now and of those to be paid to people in the future. That calculation makes a set of assumptions about things like future salary levels and stock market growth of assets, so different sets of assumptions can create different results. The 2014 valuation, for example, assumed salary growth of 16% over four years (It was closer to 6%). As such, the ‘deficit’ is always an extreme ‘what if’ guess of a future amount, not a fixed actual loss in the present day.
Talk of a ‘deficit’ sounds like there is difficulty right now in paying out pensions. This is not the case. The contributions paid in (by us and our employers) have exceeded benefits paid out (pensions) for at least the last 20 years, and the gap is growing, so the assets of USS are increasing every year. Contributions exceeded benefits by 37% in 2020. And with roughly £2 billion paid out in pensions each year, the current USS assets of £80 billion could fund that for 40 years even if no more contributions were paid in.
[Confused by pension jargon? See this post: The ABC of USS – a guide to the jargon that surrounds our pension scheme]
The USS have an obligation to provide a ‘prudent’ valuation every three years. In this context ‘prudent’ means an outcome that is considered to be more than 50% likely. The UCU argue that ‘excessive prudence’ is being applied (such as assuming much lower growth of assets than has ever been historically achieved in the long-term, and assuming higher salary increases than employers have ever agreed to). In 2018, a dispute between UCU and employer institutions was brought about by the UUK/USS proposal to end the Defined Benefit nature of the scheme and replace it with a Defined Contribution scheme (one in which we would know what money we pay in through our contributions, but would have no knowledge of what our pensions would look like). That dispute was brought to an end by the commitment to form a Joint Expert Panel which would make recommendations about the 2017 valuation and about future processes and procedures.2 However, the USS only paid lip-service to some of the recommendations, and replaced the 2017 valuation with a 2018 one which eased the ‘prudence’ slightly, but still implied a gradual increase in our and the employers’ contributions over three years.
That behaviour appears now to continue in the 2020 valuation, figures from which indicate that ‘prudence’ is at the highest rate yet, and implying contribution rates that would risk putting members off joining the scheme, and therefore act as something of a self-fulfilling prophecy, causing a devaluation of a healthy scheme. UCU and UUK have been more aligned in the last year in their frustration with the USS, and the failure of the latter to offer clear and transparent workings and assumptions. Now that the latest valuation is upon us, we need to prepare to stand by the sound arguments for more appropriate prudence, and demand that the Universities stand by their ‘covenant’, their backing of the pension.
The downward sloping line in this chart is what the current valuation implies will happen to the scheme’s assets. This shows the extent of the ‘excessive prudence’ used in calculating a ‘deficit’, and you can see that compared to previous ‘prudent’ valuations’ it is way more prudent. Look at when those other valuation said that the value of the assets would reach where they actually are today – £80bn. The 2011 Valuation suggested we won’t reach the current value until 2030; the 2014 valuation pushed that back to closer to 2040, and the 2017 valuation went further still with its prudence and said that it will take to beyond 2045. They have all been proved wrong. And yet the prudence is being pushed still further, to the point where the deficit calculation implies that the assets will never reach the value that they actually stand at in the real world.
The USS employers (Universities UK) have also responded to the valuation update, and although it’s welcome that they too are saying that the increased contributions proposed are unaffordable, and that USS should accept that the ‘covenant’ is stronger, they seem to accept that there is a genuine ‘sizeable deficit’. We don’t agree. The danger here is that university employers will react by once again pushing for a change to Defined Contribution pensions (which was what we went on strike about in 2018!). We can’t accept that either. We want the employers, including the University of Leeds, to join UCU in pushing USS to:
- re-do the valuation now instead of in March 2020, when the stock market was incredibly volatile due to the Covid-19 outbreak
- reduce the excessive levels of prudence in the valuation
- implement the full recommendations of the Joint Expert Panel
- act upon the commitment to strengthen the covenant
If you were able to attend one of the university’s ‘Conversation’ events that have been held in the last two weeks by the VC on USS, you will have heard our UCU pensions rep, Mark Taylor-Batty, making some important points about this situation. We were pleased that UCU was invited to participate in these events, but we feel that a 3 minute slot wasn’t enough to explain UCU’s views and what we believe needs to happen.
So we would like to invite you to an Open Meeting on this, where Mark will expand on the points he raised in the ‘Conversations’ sessions and the very serious concerns we have. The meeting is on Thursday 11th March from 12 noon – 1 pm. There will be plenty of opportunity for questions and discussion. Register for this event here. Once you have registered we will send you a link to the meeting, which will be held on Zoom. You are welcome to eat your lunch at the same time!
Please encourage colleagues who may not be union members but who pay into a USS pension to come too. Everyone at University of Leeds who pays in to a USS pension is very welcome.
- The assets of the scheme have grown over the last decade at an average rate of just under 11% year on year, and currently stand at around £80bn. The contributions paid in stand currently at around £2.7bn annually, and have increased over the last decade at a rate of just under 7% year on year. The money that the scheme has had to pay out in pensions each year has by contrast increased at a lower rate of 5% annually, and in the last accounts stood at around £2bn. The scheme has therefore always been and remains cash flow positive, with no need to dip into its assets to pay its liabilities. All figures extrapolated from published USS accounts.
- We responded to the first JEP report here, and the second JEP report here.
A is for Assets, but also for Assumptions.
In the Universities Superannuation Scheme pension (USS), the assets are held as investments, mostly in stocks and shares but also partially in Gilts (see ‘G’) and in other asset classes. The USS pension scheme assets are currently valued at around £78bn and were posted at around £68bn in the last published scheme accounts.Read more
Our next scheduled branch general meeting is on Wednesday 10 March, 12pm – 1pm
If you would like to submit a motion to UCU Congress 2021, to help shape UCU’s national policy and strategy, this will be our last meeting to agree the motion.
The deadline for motions to this meeting is 12pm Tuesday 2 March. Please email any motions for this meeting to firstname.lastname@example.org.
Motions to UCU Congress need to be no more than 150 words, plus title of no more than 10 words.
Please contact email@example.com by 1st March if you would like to represent the branch at either of these events (to be held online):
Thanks from the branch officers for feedback from members who are/were working overseas. Many of you were very distressed by the initial communications you received from the university and by follow up conversations. The UCU negotiating team are feeding this back in conversations with HR managers to try to make sure the process is more supportive and that you get more clarity on what you are being asked to do and why.
If you think individual support would be helpful, email firstname.lastname@example.org to request a UCU volunteer caseworker. Together we’ll do our best to ensure that the university takes people’s personal circumstances into consideration in the most supportive way possible.
Staff in Education have been worried about a review seemingly being announced at a school meeting, after which staff were invited to small group meetings to discuss this review.
UCU branch officers queried this, because any potential review/reorganisation should go through an ‘organisational change’ process involving consultation with the trade unions. After discussion with the dean, he has now given assurances that the school is not undergoing a review, that he understands staff concerns about a secret report commissioned by a previous senior manager, and that there will be no action taken based on that report.
School staff will be involved in open discussions about the development of teaching. If you would like support from a UCU caseworker in meetings with school management, please email email@example.com.
Senior management are currently consulting the campus unions and staff networks about changes to the university’s disability equality framework and trans equality policy. The UCU negotiating team has strenuously expressed the concerns raised by members about detrimental proposed changes to both of these policies. If you’d like to be involved in the UCU equality working group or disability working group, please contact equality officer Lorraine Youds.
Senior management are also consulting unions about potential changes to the university flexible working policy (current version here). We are being consulted at an early stage which is good, because it means we can all input fully rather than reacting to a finished draft. Contact firstname.lastname@example.org with any suggestions for what you think a new flexible working policy should include – our next consultation meeting about this is on Friday 19th February.
The university will be circulating another staff wellbeing survey soon. Issues identified from these surveys are discussed with the campus unions, and the branch committee would encourage you to fill in the next one, which will include questions about workload, and highlight any concerns you have. The surveys are confidential and reported in an aggregated form.
Branch officers are continuing to push for fixed term contracts to only be used in very limited circumstances. We are having some success in particular areas, and we are also monitoring the university’s job adverts so that we can raise concerns at an early stage. If you would like to be involved with our anti-casualisation working group, which will be discussing and re-launching our anti-casualisation claim, please get in touch with our anti-casualisation officers, Xanthe Whittaker and Joanne Armitage.
Library staff remain seriously concerned about the health and safety implications of Library study space being open to students.
Two motions were overwhelmingly passed at last week’s emergency general meeting supporting Library colleagues, which you can read at leedsucu.org.uk/members-vote-to-call-to-close-library-study-spaces
Members at the meeting were keen to ensure that the university provides study space for students with essential needs, and our library reps emphasised the part of the motions which calls for the use of unstaffed and remotely monitored study space such as computer clusters rather than libraries.
The branch will be calling for a UK-wide campaign by UCU to close library study spaces and return libraries to a click and collect service.