Summary of Freedom of Information (FOI) requests for responses to the September UUK USS consultation

Number 63: #USSbriefs63

Neil Davies, University of Bristol
Alison Cameron, Bangor University
Joanna Smith, Bangor University

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This is a USSbrief that belongs to the OpenUPP (Open USS Pension Panel) series.

The Universities UK September 2017 consultation

The Universities UK (UUK) employer survey of September 2017 played a very important part in the pensions dispute since it was influential in the shift from the September to the November valuation which resulted in the proposal to move to 100% Defined Contribution (DC) pensions. This USSbrief analyses what we currently know from numerous Freedom of Information (FOI) requests about institutions’ responses to that survey and flaws in its design.

In autumn 2017 the Universities Superannuation Scheme (USS) conducted its triennial valuation. As part of this, UUK conducted a consultation with the universities that make up its membership. This was the latest in a series of consultations that UUK have undertaken with employers about the USS. The consultation consisted of 11 questions which aimed to find out how universities would be affected by the changes, and what changes to the scheme they wanted or would accept. This consultation was important because it was used to help determine UUK’s response to the USS Trustee’s proposed valuation methods and assumptions (see #USSbriefs60). The institutions were sent the survey in September 2017, with a covering note detailing some of the issues. The timeline for the consultation was very tight, with employers having to return their responses by 22 September.

Universities did not intend to publish responses to the consultation. However, given the widespread interest in this topic from academics, students and the general public, FOI requests were sent to multiple USS employer institutions for copies of their response, and of their response to a similar consultation in 2014. (UUK undertook the 2014 consultation to inform the changes that were introduced at the last valuation, which resulted in all scheme members seeing future accrual on a career average, rather than final salary, basis.) In total, 95 requests were submitted. These were sent to every university in the Russell Group, all the Oxford and Cambridge colleges, and Swansea and Bangor Universities. The responses to the FOI requests were extremely varied, and both the responses and the reasons for withholding the responses are illuminating.

Which institutions did and did not respond?

87 of 95 institutions contacted responded to the FOI requests. According to the Freedom of Information Act, requests should be responded to within 20 working days. Of these 87, only 35 responded within this time limit. These responses were from Oxford and Cambridge colleges, most of which responded to say that they did not submit a response. Shockingly, some institutions stated that someone had responded, but had no record of how they responded (e.g. Homerton College, Gonville and Caius College, Corpus Christi, Sidney Sussex and Girton colleges at Cambridge). For example, Sidney Sussex wrote: ‘The previous Bursar completed the online questionnaire for the 2017 UUK USS valuation consultation as an individual and not on behalf of the College. As this was an online survey, he has not been able to find a copy of his response’.

Kudos to the four institutions that responded in a timely fashion and provided a copy of their response: Lancaster and Exeter Universities; St Catharine’s College, Cambridge; and Pembroke and Hertford Colleges, Oxford. The following did not respond to the requests at all: Magdalen, Trinity, Kellogg, Keble, Harris Manchester, Corpus Christi, Christ Church and All Souls Colleges, Oxford; and Robinson College, Cambridge.

What excuses did institutions come up with for not providing a response?

Of the institutions receiving a FOI request 34 either did not respond or initially rejected our request. The Freedom of Information Act provides various grounds that can be used to justify a refusal to disclose. The institutions that refused used several of these to withhold the information. These included 1. commercial sensitivity (e.g. Swansea), 2. the need to promote a free and frank discussion (just not with their staff, e.g. York), and 3. that there was little public interest in disclosing the response (e.g. Edinburgh). There was nothing in the responses that should have been commercially sensitive, as indicated by the fact that some institutions published their responses immediately. Nor is it plausible that publishing a university’s official position should inhibit free and frank discussion. If anything, withholding this information makes it harder for university staff and management to openly and accurately discuss the future of the scheme. As for the supposed lack of ‘public interest’: presumably, the people citing this in response to our requests were not on Twitter. For the institutions that either rejected the FOI request, or did not respond, internal appeals were submitted. If they rejected the appeal, an appeal was made to the Information Commissioner. Those appeals have all been decided one way or another, with the result that we currently have 31 responses to the consultation [1].

So how did these employers respond?

In what follows, we address responses to most of the survey questions. (We quote the exact questions that were asked by UUK.) All the responses received can be seen here, and a spreadsheet summarising the responses can be seen here.

Whose views do the survey responses represent?
Q2: Please confirm that the content of this questionnaire (and related documents) has been discussed such that the views expressed can be considered to be the authorised view of the institution.

Most of the responses from Russell Group universities indicated that response was the official view of the institution. However, almost all the responses from the Oxford and Cambridge colleges stated that it was not the official view, because there had been insufficient time to get the response through the relevant governance processes. This fact coming to light, along with the revelations concerning coordination of College responses, precipitated a crisis of governance in many of the Oxbridge colleges and Oxbridge as a whole.

Attitude to risk
Q3a: Does your institution support the level of risk (i.e. level of reliance being placed on the employer covenant) being proposed by the USS trustee for this valuation?

Of the 31 responses, 14 called for ‘less risk to be taken’. These consisted of Bristol, Bangor, Bath, Nottingham and Oxford, and some of the Oxford and Cambridge colleges. Perhaps the most surprising response was from Bath, whose Vice-Chancellor Glynis Breakwell is also a member of the USS Trustee board. Bath rejected the USS Trustee’s proposed approach to risk and called for less risk to be taken. UUK emphasised the ‘significant minority’ (42%) of institutions that wanted ‘less risk’, and this was influential in the USS Trustee’s decision to accelerate its planned shift in investments from equities to bonds. Increasing the proportion of the fund invested in assets that are expected to lose value over time (i.e. that have negative real yields) will naturally make it tricky and very expensive to provide pensions. In effect, we need to save £2 today for every £1 we will need in retirement.

Short-term reliance
Q4: If the USS trustee decides to take action between valuations because short-term reliance on the employers has become too great, what action do you believe should be taken (potentially temporarily)?

In essence this question asks employers: if the USS Trustees think the scheme needs more cash in the next three years, will you give it to us? Or should we cut future accrual of benefits? Or do you want to sit on the fence? Specifically, it asks whether institutions would be able or willing to contribute more in between valuations on the basis of the USS actuaries’ models. Most institutions took the easy answer here and sat on the fence by saying that their position would depend on the outcome of the 2017 valuation. The (dis)honourable exceptions were Exeter, UCL, and Sussex who argued for cuts to future service benefits, and the honourable exceptions were Liverpool and Leicester, who offered to pay more.

Employer contributions
Q5a: Over recent months UUK has compiled a view from institutions that 18% is the maximum level of regular contributions that employers are willing to pay towards USS benefits. We need to affirm this view for the 2017 actuarial valuation. Please indicate your institution’s view on the statement that regular employer contributions should be no more than 18% of salary.

The 3 possible responses were: i. support; ii. moderately oppose (i.e.we might be willing to pay more in certain circumstances); iii. strongly oppose (i.e. we would be willing to pay more than 18% of salaries to reduce impacts on benefits). Oxford, Pembroke, Lancaster, LSE, and Birmingham stated that they would be willing to pay more than 18%. Cambridge said that it would have to consult on paying more. The remaining institutions did not want to pay more than 18%. Since submitting this response, the USS Trustee has taken the step of introducing changes to contribution rates under Section 76 of the USS rules. So the institutions’ responses to this were statements of preference, rather than factual assertions that they could not pay more than 18%, and they do now face increases above this level.

Likelihood of scheme opt-outs
Q6a: Does your institution believe that increasing member contributions beyond the current 8% of salary is likely to lead to more scheme members opting out?

Seven of 30 employers responding to this question said no; the rest said yes. It is not clear what evidence, if any, they based these responses on.

Appetite for a move to 100% Defined Contribution (DC)
Q7a: Does your institution prefer maintaining a level of DB accrual for future service at this valuation or moving to a DC-only solution (either temporarily or permanently)?

Only nine out of the 31 responses wanted to retain some element of DB. The rest wanted to move to straight DC only.

There were four further questions asking for 1. comments on how to organise Defined Benefits if some DB accrual were possible in the future; 2. comments on the design of a Defined Contribution scheme; 3. suggestions of how UUK or USS could support institutions in the valuation process; and 4. other comments on the valuation, including the valuation assumptions, cost and risk, future benefit design, mutuality and exclusivity, and Section 75 debt (effectively the amount institutions need to pay to leave the scheme). These last items all point to possible means through which the multi-employer Scheme could be broken up.

How should the survey have been conducted?

Now that we know roughly what the UUK survey found, it is also possible to see its many flaws and blind spots. First, representativeness. If you are conducting a survey, you want to sample individual responses to give equal weight to each person. However, it is not clear whether UUK summaries of the survey were simple or weighted means of responses. A simple mean would give equal weight to employers that employ very few USS members, and to employers with thousands of USS members. The survey also included individual Oxford and Cambridge colleges, which appear to have coordinated their responses. The simple mean method potentially gives far more weight to the views of Oxford and Cambridge. One way to overcome this would have been to weight responses by the number of USS members at each institution.

A second issue is that the responses to the survey had to be returned within a very short time window. Many responses stated that either they were not able to get the response approved by their governance procedures, or that they couldn’t submit a response because of the short time scales. If the USS Trustees believed that major changes were required, they should have given enough time to consult both university managers and staff. The USS Trustee had known that it needed to complete this valuation for three years, so it had ample warning. Why was the deadline for responding so tight? The Joint Expert Panel (JEP), in its September 2017 report, pointed out the problems of short consultation period (p.42) and argued that longer periods would result in ‘fuller’ and ‘more meaningful’ outcomes.

Third, it is not clear if the people completing the responses understood the implications of their answers or had enough information to assess the impact of the changes they were supporting on their staff. Indeed, the JEP report criticised employer consultations for ‘not fully explor[ing] the consequences or trade-offs of the issues under investigation’, and stated that it is ‘debatable whether employers have been able to give fully informed answers to important questions’. Take, for example, question 3. on risk: this question relates to the proportion of USS’s assets that are invested in bonds compared to equities. Many responses rejected the USS Trustees’ proposals about when the scheme should shift its investments from equities to bonds. The Trustees recommended delaying this shift, rather than starting now. Rejecting this proposal by calling for ‘less risk’ and an immediate shift of the investments substantially increased the cost of providing benefits in future. This question provided little or no reference about the costs and the benefits of this decision. The benefits of calling for ‘less risk’ are that the standard deviation of the deficit would fall modestly. The costs are that the average deficit would increase substantially and it would become more or less impossible to provide DB pensions in the future. It is not clear whether this was explained clearly and transparently in notes and guidance provided by UUK and USS.

Finally, the documentation and guidance provided by the USS was woefully inadequate. It provided no information about the implications of the different responses for staff on average, or for specific groups. For example, on average women live longer than men. Therefore, if you cut DB pensions and replace them with DC pensions, the impact is greater on women than men. This made it impossible for university managers to respond to the survey or understand the costs and the benefits of potential changes to the USS. The USS essentially only presented information about the benefits of changes (less risk), and no information about the impact on staff (cuts to their pensions which could be worth hundreds of thousands of pounds).

Who should we hold accountable for this debacle?

The 2017 USS valuation has been an utter debacle for UK Higher Education. It has brought a critical and extraordinarily valuable part of universities’ remuneration into disrepute. The USS has lurched from crisis to crisis over the last seven years. Ordinary USS members have seen the pension they earn each year changed in 2011, 2014, and now again in 2017. So who is to blame? UUK? Perhaps. As described above, their implementation of this survey was flawed at best. But ultimately even this survey, important though its role was in the proposed shift to DC, is a relatively minor sideshow compared with the much graver problems that have been revealed. UUK are not responsible for undertaking the valuation, or providing adequate and accessible information about the valuation to ordinary scheme members. The USS had three years to prepare for this valuation. It had substantial resources to conduct the most credible, transparent and open valuation possible. Despite this, the 2017 valuation commands at this point neither the confidence of members or — we assume — many employers. The disputed valuation led to the longest and most damaging period of industrial action in UK higher education for many years and there are many issues that remain unresolved.

Bill Galvin (Group CEO of USS) and David Eastwood (Chair of USS Trustees) have overseen a disastrous valuation that has led to major disruption across Higher Education in the UK. Their tenure has seen a steady erosion of members benefits and increased contributions, simultaneously with steadily rising costs and executive pay. The UUK September 2017 survey is one part of a much larger and complex valuation process that increasingly looks to have been mishandled from beginning to end.


[1] The total number of available responses to the September 2017 UUK consultation is higher than 31, since additional FOI requests were made to USS employer institutions by others in the summer and autumn of 2018. These are not considered here.


Many thanks to the 168 people who were willing to add their names to the emails requesting FOI appeals — and of course to the amazing USS briefs team.

This is a USSbrief that belongs to the OpenUPP (Open USS Pension Panel) series. This paper represents the views of the authors only. The authors believe 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 hashtags #USSbriefs63 and #OpenUPP2018; the authors will try to respond as appropriate. This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.