I had previously voiced some reservations regarding the joint panel of experts that figures centrally in this offer. My fear was that this would not add much, as there would be a deadlock between the two sides. I have since been informed — and this is confirmed by examination of the wording of the offer— that there are now many more points of common understanding between the employer and the union than there were a few weeks ago. As the result of the overwhelming strike ballots followed by fourteen days of strikes, plus such events as the revolt of the Oxford dons outside of the Sheldonian, etc., it is clear that employers have now come to a mutual understanding with the union of the importance to USS members of generous and reliable pension income throughout their retirement.
This mutual understanding comes through most clearly in point 5 of the offer:
The panel will make an assessment of the valuation. If in the light of that contributions or benefits need to be adjusted in either direction, both parties are committed to agree to recommend to the JNC and the trustee, measures aimed at stabilising the fund to provide a guaranteed pension broadly comparable with current arrangements.
This commitment “to provide a guaranteed pension broadly comparable with current arrangements” represents a huge shift in UUK’s position, from the one that underpins their 23 January proposal to reduce the DB salary cap to zero.
Of course, the commitment is not at any cost. Point 4, for example, repeats the commitment to “a guaranteed pension comparable with current provision”, while also acknowledging that such commitment reflects “the clear wish of staff”. But it also notes that the provision of such pensions must meet “the affordability challenges for all parties, within the current regulatory framework”. This is simply a reflection of the constraints of social reality. There is, however, a commitment to discussion of “the role of government in relation to USS”. Presumably, this would involve efforts to lobby government to modify these constraints.
Employers and the union are now therefore united behind the end of finding a way to sustain a guaranteed pension broadly comparable with current provision. But they have not yet found a way to do so, within the constraints of the current valuation. As someone who has been closely following matters, and who has been trying to find a way to move things back to the September limits of these constraints, I can confirm that we’re not there yet.
There needs to be a more thorough exploration of the possibilities for sustaining something broadly comparable to our current pension provision, within constraints of affordability and acceptable level of risk. That is what the joint panel of experts will be assigned to do: to find a way of opening up the space to do so. Both sides will appoint members who share the goals spelled out in the text of the offer. And they will apply their expertise to try to come to a joint solution. There will, no doubt, be disagreements regarding affordability, risk, and the best pension design between people appointed by the two parties. But, rather than an antagonistic, zero-sum conflict, it will be a joint attempt to find fair terms of cooperation to the mutual advantage of employers and scheme members.
There is a genuine risk that it will be impossible to find a solution. Even if a solution is possible, each party enters this bearing the risk that the other party will not negotiate in good faith and will try to engineer a solution to their own, rather than mutual, advantage.
There is also the fact that it will be impossible to achieve full clarity, in advance, regarding the flexibility the Pensions Regulator will allow, regarding both timetable and the limits of an acceptable valuation.
It will also be essential that USS demonstrates a willingness to be as accommodating as possible, regarding timetables and the limits of an acceptable valuation.
We need to hope that, now that the employer and the union have finally achieved a mutual understanding regarding the importance of providing “a guaranteed pension broadly comparable with current arrangements”, tPR and USS will do all they can to make this possible, rather than standing in the way.
I now think the odds of coming to an acceptable resolution of this pensions dispute by this route are now relatively high. I also see no better alternative. Therefore I strongly support this offer.