The following email was sent to all USS members at the University of Leeds (as many as could be identified) in the week of 21 March 2022
As you know, our Vice-Chancellor has arranged a new series of ‘town hall meetings’ to explain why the University Council supported the UUK proposals to cut your pension income, and why it rejected the UCU proposals that would protect that income. As your representatives in this issue, we want to take some time to outline for you some of the things we expect the VC might say, and what our responses would be if invited to that conversation.
- The VC could argue that it was necessary to respond to the risk that the UCU proposals, if approved, could cause escalating contribution increases for both staff and universities. She might argue that these escalating costs would compromise the University’s future opportunities to fund investment, maintain the student experience and hire staff.
The UUK agreed to remove this misrepresentation of the UCU proposals from their website after acknowledging it to be incorrect (following this correspondence with a UCU negotiator), but we are aware that some UUK VCs have nonetheless persisted in circulating the misrepresentation in all-staff communications. Behind the scenes, UUK also persisted in circulating it to University governing bodies within consultation documents, where it remained in an Appendix to the UUK material. This created the false impression for governing bodies that the UCU proposal implied increases of up to 43% of salary aggregated contributions over coming years. This was a seeming deliberate misrepresentation that took one of the three UCU proposals and extrapolated it in isolation from the other two. In fact, the cost to the University of Leeds of the UCU proposal for the next academic session was just £3.4m, or around 6% of the cost of Curriculum Redefined. After 2023, the UCU proposals implied no more increases in employer contributions.
We believe our University Council reached its decision in part based on this misinformation about the potential risk of increases in contribution rates in the UCU proposals, when in fact those proposals clearly outlined how contributions might never again rise above 25.2% for employers and 9.8% for employees after April 2023.
- The VC could argue that there was a lack of clarity in the UCU proposals in terms of how they would guarantee a cap on contribution increases after April 2023.
This would not be true. The matter was addressed on pp. 4-5 of the proposals document. UUK claimed that this was not ‘in terms which can be legally understood and codified’, but this objection made no sense, as all that was required was a mechanism for assuring that the employer rate would not rise above 25.2% (nor staff contributions above 9.8%), which had been supplied. No legal process was required. Nonetheless, a pension lawyer was contacted by UCU negotiators, and the lawyer indicated that all that would be necessary was a change of scheme rules. This was outlined by your negotiator in an email to UUK and USS (including their legal teams) on the evening of 15 February, with the outline shared in the pubic domain here. There was no objection offered from UUK and USS legal teams.
Nonetheless, our Council was given a paper which included the factually incorrect statement ‘These issues do not appear to have been addressed in terms which can be legally understood and codified; this would be necessary in order for employers to be able to consider UCU’s proposal as a viable alternative’. We believe the University of Leeds Council formed its decision in part on the basis of this seeming misinformation.
- The VC could argue that the UCU did not explain the grounds on which it believed a 2022 valuation would deliver a more favourable outcome.
This would be untrue. The USS Trustees themselves released a set of interim valuations which indicated that the assets of the scheme have been trending recently at around £90bn, which would represent a surplus, and no longer a deficit, if the same metrics and assumptions as employed in the 2020 valuation were adopted. The USS Trustees even indicated to UUK that at current funding levels, the recent UUK proposals would only cost an aggregate of 25.8% of salary. Our Council nonetheless proceeded with the 31.2% aggregate, as to pursue any lower cost for the University based on the actual, calculated current scheme finances would have required them to condone UCU’s first proposal of a new valuation, rather than their preferred deficit model calculated during the 2020 Covid economic slump. And to agree the UCU proposals would no doubt have resulted in current benefits being maintained for current contribution levels, or close to. A reasonable observer might read that refusal to agree to the proposal for a new valuation, given the USS’s own evidence of the improvement of the financial health of the scheme, as a symptom of an ideological fixation against Defined Benefits.
- The VC could argue that the UCU proposals might not have met with the Regulator’s approval.
The law does not give the Regulator any role in an incomplete valuation, so this would not be a legitimate argument. References to the Regulator are often made in ignorance of its role and remit, or as a bluffing trump card (see also, longevity). A full response to this question of the Regulator by qualified actuaries is presented on pp. 7-8 of this document.
- The VC could point out that the UCU proposal implied temporarily increased contributions, whereas the UUK one did not.
It is true that the UCU compromise proposal involved a temporary increase in employer and employee pension payments for one year only, between April 2022 and April 2023. This was in accord with the outcome of the consultation of all USS members; consultation responses revealed strong majority support for paying higher contributions to retain current benefits. The UCU proposed a limited, one-year increase in contributions as a means of protecting tens of thousands of pounds of retirement income, before returning to 9.8% in 2023 and as a maximum thereafter. So, for example, someone earning £40k would have paid around £450 extra next year to secure between £200k and £400k of retirement income, depending on age. Where else would you find such a return? The cost to the University of Leeds of this one-year increase would have been approximately £3.4m.
- The VC might point out that there is to be a contribution of 20% of salary being made into the Defined Contribution element of the salary, under the UUK proposals.
This is true, but this contribution is not all from the employers, despite their recent spin to suggest this. It includes 8% of the 9.8% of salary that we pay in. Employers then pay in 12% (rather than 16% as per the 1/2 contribution arrangement). The remaining fractions of the contributions above the Defined Contribution cap goes towards cross-subsidising the Defined Benefit element.
- The VC might try to indicate that the UUK have been reasonable in proposing to defer the CPI cap that, if left in place, could cause significant further damage to the values of pensions in retirement.
The UUK proposal to defer the CPI cap makes an inadequate improvement to damage already done by other aspects of the UUK’s cuts to guaranteed income in retirement and, if anything, examining its impact supports the UCU’s argument for modest and affordable short-term contribution increases to secure current benefits.
- The VC might argue that the UCU modeller of the loss to pensions was inaccurate, and was a cause of prompting fear in people over the changes.
It is true that the UCU modeller could not be accurate, because the USS would not share the assumptions they would use for their modeller. However, when the USS modeller finally became available, it became clear that the USS modeller demonstrated that the UUK cuts were even worse than the UCU modeller had been showing for most people. This was reported in The Guardian in November. The UCU modeller, then, could hardly be fairly accused of exaggerating the impact of the UUK cuts. There has been another modeller circulating, constructed independently by UCU members at the University of Bristol UCU branch, and it openly declares its assumptions. You should note that the USS modeller default assumptions include inflation never going over 2.5% , investment growth of 4.7% and that there will be an annual increase in salaries of 4%. You can adjust these assumptions in their modeller.
- The VC might refer to the opportunity now to explore lower cost options for pension provision, and the exploration of Defined Benefit models such as conditional indexation.
The UCU proposal did not at all preclude these possibilities. The conditional indexation proposal was originally worked up by UCU in collaboration with the Universities of Oxford and Cambridge, and was considered by both UCU and UUK actuaries. A low-cost deal for low paid and precariously-employed staff was part of the UCU proposal to the August JNC, a proposal which our own University Council was told did not exist (‘the lack of any alternative proposals put forward by [UCU]’). Progress on developing CI or lower cost options anyway require negotiations in good faith by the UUK, which recent experience tells us is not something we can expect.
- The VC might argue that she had little power herself to influence the UUK, because this was a national issue that needed addressing at the national level.
This is a line that UUK have recommended to senior managers, and has been wielded at most Universities. But there is no hard distinction between vice-chancellors and UUK, because the UUK is itself composed of Vice-chancellors. It is therefore counter-logical to argue that a VC cannot persuade herself and other VCs. Leeds has one of the largest densities of USS members, and therefore sitting at the UUK table with that mandate, our VC was able to influence the direction of movement on this matter at any point in the last year. Indeed, the very statement that Leeds has supported the UUK proposals would be pointless in itself if Leeds had no influence on the matter of USS-related decision. Had Leeds supported the UCU proposals, many other Universities with much smaller numbers of USS members would have been likely to follow suit.
Thank you for your time. If you are a USS member at the University of Leeds, you may wish to add your name to this petition. It already carries over 500 signatures. You can hear a summary of the last year’s manoeuvres in USS, and an account of recent negotiations directly from one of UCU’s negotiators here. Updates on the legal challenge that could result in an injunction being served on USS, halting the detrimental changes, can be found here.
Pensions officer, University of Leeds UCU
This page was last updated on 25 March 2022