Misleading communication: case studies from Universities UK and the Employers Pension Forum

Number 8: #USSbriefs8

Felicity Callard, Birkbeck, University of London

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The current UUK proposal (23 March) has been, we understand, drafted entirely by UUK with no contributions from UCU negotiators. This document needs to be read in the context of other communications about pensions — both from UUK and from the USS Group of the Employers Pensions Forum (EPF) (the body established by UUK, GuildHE and UCEA in 2007 to develop strategy around UK HE pensions). Several of these communications have been criticised for containing erroneous, unclear and misleading information, and the current UUK proposal is no different in this respect. This brief presents examples that substantiate both of these points. There is significant lack of trust in UUK on account of its actions during the strike, but the longer history of miscommunication by UUK and the USS Group of EPF also makes it difficult to trust UUK’s current proposal.

Inaccuracies over longevity data

Data relating to increased life spans have frequently been used to justify the need to do away with Defined Benefit pensions. On 11 August 2014, the EPF released ‘Latest Q&As on the USS’, which included the question: ‘What are the issues with longevity and will they really impact on USS?’ The answer provided noted that ‘Current longevity patterns are significantly different to those when the scheme was set up in 1974. Then it was expected that a USS pensioner retiring at age 65 would live for 6 to 8 years in retirement so the cost of the scheme and the contribution rates were set on this basis. By 2014 the anticipated length of retirement is around 30 years, so USS pensions will need to be paid for a significantly longer period than they have in the past and this has increased the cost.’

Jane Hutton, a professor of statistics at the University of Warwick (and, subsequently, a UCU-appointed trustee of USS), sent a letter to EPF on 11 September 2014, contesting what she described elsewhere as ‘gross errors in life expectancy’. She argued that EPF had wrongly stated that in 1974 the life expectancy of USS beneficiaries was ‘half (49%) that of the general public, but in 2014 it is 1.4 to 1.6 times greater!’ She concluded her letter by noting that the ‘question and answer sheet leads me to question the reliability of the Employers Pensions Forum’.

Jane Hutton reported that by early October 2014, the EPF had altered its response to Question 9 (which now read simply ‘longevity issues do impact on USS as they do on all defined benefit pension schemes. This is one reason why the costs of defined benefits pensions schemes have been increasing’). The date of the altered document did not, however, change to reflect altered content. And while there were, at this point, no specific data about life expectancy detailed on the document, none of the conclusions in the Q&As was, Hutton argued, altered.

Only three days earlier, on 29 September 2014, the EPF had published ‘Communications briefing on USS: UCU’s ballot for industrial action’, which stated, ‘With significant complexity surrounding the process for change in USS, the content of sector communications needs to be factual, clear and concise’. Their own communications appeared to be anything but.

Myths, Misconceptions and Misunderstandings

Further indications that EPF’s communications were far from factual and clear came in October 2014, when the EPF published a document authored by none other than Alistair Jarvis (now CEO of UUK), entitled ‘Proposed Changes to USS — Myths, Misconceptions and Misunderstandings’. This document aimed to rebut ‘[m]any of the comments and claims that have been made against the case for necessary reform’ through claiming these were ‘based on misunderstanding or misinterpretation of the facts’.

The seventh point of their document stated that ‘The assumptions used to value the fund have been chosen to artificially create a large deficit’, and went on to challenge this alleged myth/misconception/misunderstanding through noting that while ‘[v]aluing a pension scheme is an inexact science’ and while ‘the Trustees changing the assumptions in this instant could affect the size of the deficit’, ‘it cannot change a deficit into a surplus’. This was because ‘The deficit is sizeable and persistent and benefit reform is unavoidable’.

It was this seventh point that particularly exercised a number of senior statisticians and financial mathematicians when they challenged the EPF document, arguing that it ‘contained misinformation and a mistake’. They described the assumptions of the seventh point as ‘unreasonably pessimistic and incoherent’ because the ‘predicted salary increases assume a buoyant economy while investment returns assume a recession’. They further noted that ‘[i]t takes little mathematical knowledge to recognise’ that the EPF’s statement that ‘changing the assumptions…cannot change a deficit into a surplus’ was simply wrong.

A few weeks later, on 7 November 2014, the EPF published an expanded set of Q&As, also authored by Alistair Jarvis, noting that the document had been updated to include more facts. Jane Hutton and Saul Jacka disagreed. In a detailed letter to Anton Muscatelli (then chair of the USS group of the EPF), which took on the detail and overall tenor of the Q&As, they argued that it appeared to include ‘a mixture of the highly disingenuous, the unfortunately misleading and the downright erroneous, contrary to the stated aspiration “to include additional facts’’’. At time of writing, the document is still on the EPF website, seemingly unchanged.

Towards total DC?

A number of EPF documents have been structured in a question-and-answer format, but the answer often carries a rather oblique — if not disingenuous — relationship to the question. On 29 January 2015, EPF published a briefing, again authored by Alistair Jarvis, intended to inform employees about the proposed changes to pensions. One question asked ‘Is this the first step toward providing all USS benefits on a DC basis?’ Given UUK’s more recent efforts to shut down the DB element of the scheme (see USSbriefs1), we can see in hindsight that the correct answer was ‘yes’. Instead, the question was met by a non-committal statement rather than a direct response: ‘The hybrid scheme has been designed on the basis that all members will be entitled to future benefits in the CRB scheme on their salary up to £55,000’ (and then giving further details about the CRB scheme).

Double-counting

UUK published, in the middle of the current industrial dispute, a ‘statement of risk’. In it, UUK clarified that it ‘did not only draw on the survey as a source of evidence’ in reaching conclusions about the levels of risk universities would accept. As one of the six additional sources of evidence, the statement listed a ‘Universities UK survey which followed the publication of the USS technical provisions consultation in September 2017’. This was precisely the survey UUK had already mentioned — in other words, it was double-counting. (Some of the other sources of evidence mentioned in the statement of risk were the UUK-led USS employer events from September 2016; USSbriefs1 discusses how the UUK briefings for these town hall meetings, which were run with the help of Aon Hewitt, oriented employers around both flexibility and the need for ‘more fundamental benefit reform’.)

Misleading communication: the current proposal

In light of these many instances of miscommunication, particular scrutiny is being given to the UUK proposal of 23 March. The UUK website states that: ‘ACAS has proposed the following, which UCU and UUK will now take to consultation with respective parties’. The phrase ‘ACAS has proposed’ makes it difficult to know that the wording of the numbered draft itself was, according to one of the UCU-elected negotiators and reported on Twitter, not written through negotiation but by one party only.

The second point of the proposal notes that ‘It will require maintenance of the status quo in respect of both contributions into USS and current pension benefits, until at least April 2019’. While this is presented as an advance, none of the alternative proposals (23 Jan JNC UUK proposal, 12 March ACAS-mediated proposal) had proposed any change from the status quo until at least April 2019.

Intergenerational fairness?

The 23 March 2018 proposal notes that ‘It will take into account the unique nature of the HE sector, intergenerational fairness and equality considerations’.

While such a sentence appears at face value to be something anyone would applaud, the phrase ‘intergenerational fairness’ as used by UUK is complex. Recent UUK documentation shows that it deploys this term in calls for a move away from Defined Benefit pensions. UUK’s document ‘Suitability and Sustainability: Pensions in the HE sector’ (June 2017), which is presented as a framework to be used in negotiations over pensions, argues that ‘the cost of meeting DB legacy promises is a significant drag on employer resources and has implications for intergenerational fairness’. If UCU members accept this proposal, the members could be endorsing one of UUK’s previous arguments for the end of Defined Benefit, without realising what they are doing.

Further on in this document, in the section on intergenerational fairness, UUK builds its case for the need to move away from DB pensions by arguing that:

There is also a growing body of evidence that younger employees are choosing different working patterns and practices to their older colleagues and this raises the question of whether the current DB schemes remain appropriate for the needs of all employees.

The only evidence UUK cited for this claim was a report from the management consultancy PwC entitled ‘Millenials at Work: Reshaping the Workplace in Financial Services’. This instance, in which experiences of profound and involuntary precarity are misleadingly represented through the language of choice, makes it difficult to feel confident in how UUK would follow through on its proposed plans to ‘take into account … intergenerational fairness … considerations’. (See also USSbriefs4.)

Alistair Jarvis’s letter to Sally Hunt

One additional communication that has been important in relation to the current UUK proposal deserves our attention. This is the letter signed by Alistair Jarvis that was shown by Sally Hunt to branch delegates at the UCU meeting on 28 March 2018. In that letter, Jarvis stated that ‘we are committed to maintaining a meaningful Defined Benefit pension offer at this valuation’ (my emphasis). Notably, UUK described the ACAS-mediated offer of 12 March 2018, which was roundly rejected by UCU members, as one that ‘proposed to increase employer contributions to the scheme to maintain meaningful defined benefits (DB)’. This letter, then, does not necessarily offer anything different from what was rejected on 12 March 2018.

The documentation issued on behalf of UUK and EPF in the last few years, and the errors or evasions contained therein, makes it difficult to push from one’s mind the possibility that some of these have been deliberate rather than accidental. For an organisation that is currently led by a Chief Executive who has a background in communication, UUK appears to have a very different understanding of what communication entails from that specified by their own organisation (EPF), in ‘Communications briefing on USS: UCU’s ballot for industrial action’, which rightly noted the need for clarity, concision and accuracy in communications about any change in USS pensions.

Acknowledgements

I am indebted to Jane Hutton’s careful archiving, held within the University of Warwick website, of both her own and UUK’s/EPF’s documentation relating to USS pension discussions.


This paper represents the views of the author only. The author believes all information to be reliable and accurate; if any errors are found please contact us so that we can correct them. We welcome discussion of the points raised and suggest that discussants use Twitter with the hashtag #USSbriefs8; the author will try to respond as appropriate. This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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