Why it’s essential we take a stand now over USS
This is a USSbrief, published on 24 September 2019, that belongs to the OpenUPP (Open USS Pension Panel) series. The author is a USS scheme member, a member of the University of Sheffield USS Working Group, a UCU-elected JNC member (June 2018-present), and is writing in a personal capacity.
With member contribution rates into the Universities Superannuation Scheme (USS) set to begin their climb upwards, it is clear that the existential threat to the scheme has not gone away. The Joint Expert Panel’s first report has been all but ignored, and the good faith union members put into a solution based on expertise, evidence, and reflection has been cast aside. As it becomes all but certain that we will see our guaranteed pensions disappear over the next two years without further strike action, I set out in this USSbrief why I believe it is essential we act now.
Autumn 2018–spring 2019: an opportunity missed and a shift of power
In September 2018, I was present at a meeting of the Joint Negotiating Committee (JNC) when Joanne Segars, chair of the Joint Expert Panel (JEP), unveiled the findings from the panel’s first report. The relief from both the union and employer representatives was palpable: with the sky-high contribution rates being demanded by USS deemed an artefact of a flawed valuation, a negotiated solution appeared to be in sight. It was clear that there should be no need for a return to industrial action.
By October 2018, with the JEP report still fresh, UCU’s position vindicated, and further flaws found in the logic of USS’s infamous Test 1 (see USSbriefs58), there was a brief passage of time when UCU were ‘top dog’ in the JNC discussions: USS were on the ropes, and Universities UK (UUK), also stung by the JEP report, were looking for a way out.
The JEP report should have marked a turning point in the years-long dispute, in which evidence, discussion and collaboration would lead the way to finding a mutual settlement. Yet this would be to overlook the role those running the pension scheme. Under CEO Bill Galvin, USS do not do evidence-based discussion, nor do they value collaboration. A swift resolution to the 2017 valuation, based on discussion around the JEP’s recommendations, was lost.
Over the winter of 2018–19, the power balance began to shift: by refocusing discussion onto a new valuation, USS regained their confidence and control. UUK, which started the autumn receptive to UCU’s input, stopped listening. By January 2019, UUK had decided the solution lay in finding an agreeable ‘trigger contribution’ mechanism to bring down the costs (and assured us they had this in hand); by May 2019, talks on trigger contributions had broken down, and an outcome based on rising contribution rates solidified. Rather than listening to warnings from UCU that this outcome would cause a flare-up of the dispute, UUK resorted to reassuring members that it was in line with the JEP’s report, an insult to the intelligence of those who had read it.
Autumn 2019 and beyond: contribution increases, the 2020 valuation, and a ballot
As an outcome of the 2018 valuation, member contributions will rise to 9.6% in October 2019. In October 2021, they will rise to 11%. UCU have set out the case for why there is no reason for member rates to rise above the pre-strike level of 8%, and why employers should pay any extra that USS insists upon. Employers have been unwilling to do this, though did make a last-ditch offer to reduce the rate to 9.1% for the first two years (11% thereafter), on condition that the union agreed to a moratorium on strike action over USS for the next two years (later modified to not proceeding with the current ballot). UCU’s Higher Education Committee rightly rejected this offer, in line with a recommendation from the negotiators that they did not believe it would be the best that can be achieved through negotiation.
In the summer of 2019, a working group was formed at USS to discuss the modelling and asset projections crucial to making informed investment decisions, with potential knock-on effects to the valuation. Such a group could and should have formed much earlier, but a lack of interest from UUK (who were distracted by fruitless trigger contribution discussions) meant that UCU were alone in pushing for data and discussion, and easily sidelined by USS as a result. While the working group has the potential to make significant progress, its success will be determined by how committed USS are to providing the underlying analysis and data, and how hard UUK will work with UCU to make sure it happens. In addition, a group to look at valuation methodology is expected to be formed this autumn, with representatives from USS, UCU, UUK — including, crucially, USS trustees. This is where the methodology for the 2020 valuation will be set. Once fixed, overturning it would be a mammoth task.
A strong ballot result in the USS dispute would mean that UCU could return to being top dog by November 2019. UUK will be desperate to do whatever it takes to avert strike action. USS will be put under huge pressure as the body causing the turmoil. UCU will be listened to in the valuation discussions — rather than being fobbed off. USS will not be able to delay work or deny access to data in the way they have done in the past. In a best-case scenario, the pressure resulting from a successful ballot result will be enough to create a sea change in relation to how USS conducts its business.
How far UUK move on the contribution rate as a result of the threat of industrial action is, of course, the immediate issue. They may move far enough and quickly enough to prevent industrial action. But in the long term, what will matter will be the potential change in approach at USS resulting from UCU members demonstrating they are willing to take industrial action in order to be heard.
It is essential we are ready to take a stand now. The clearer the mandate and response rate, the more likely we will be able to make progress through negotiation. If we turn down this opportunity in the hope that talking alone will do the job, then not only are we repeating an approach that has seen incremental downgrades at every valuation since 2011, we are also setting ourselves up for a much bigger and harder battle to win later on when faced with an adverse valuation in a year’s time. A ‘wait and see’ approach to the 2020 valuation would be a disaster. Please vote in the UCU USS ballot — and encourage everyone you know to do the same.
This is a USSbrief, published on 24 September 2019, that belongs to the OpenUPP (Open USS Pension Panel) series. The author is a USS scheme member, a member of the University of Sheffield USS Working Group, a UCU-elected JNC member (June 2018-present), and is writing in a personal capacity. 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 hashtags #USSbriefs82 and #OpenUPP2018; the author will try to respond as appropriate. This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.