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March 9th, 2022:

Reading UCU Comments on USS Pension

This is a message from the Branch President of Reading UCU for all colleagues,
in response to the message from Vice-Chancellor Robert Van de Noort posted
on the staff portal here.

On 22 February 2022 the Chair of the USS Joint Negotiating Committee, Judith
Fish, used her casting vote to determine that proposals put forward by
Universities UK (UUK) last summer should be implemented from 1 April 2022.
The UUK proposals were tabled at the USS Joint Negotiating Committee (JNC)
at its meeting on 31 August 2021 where the employers voted for the proposal,
and the Chair used their casting vote to make the final decision. See here for
the UCU report of the meeting.

These changes, effective from 1 April 2022, have been calculated by UCU and
USS as being detrimental to the final pensions received by those in the
scheme: typically, the losses will range from 10% of final pension for those
nearing retirement, to 51% of final pension for those starting out in the sector.
Staff can review their own likely losses at the USS supplied modeller or at the
UCU modeller or can compare the losses at a separate app produced by some
staff at Bristol University. The changes were designed to respond to
predictions of a significant loss in the future value of the pension scheme: this
was based on a snapshot valuation of the scheme undertaken on 31 March
2020 (during the first lockdown).

Benefits accrued to 1 April 2022 will remain unaffected.

UCU sought to table a counter proposal at that August meeting, but the
employers’ representatives refused to agree to underwrite those proposals
(the covenant support) which meant that the proposals could not be formally
presented to the USS JNC for consideration and voting. As the proposals could
not be formally presented and were unviable without the covenant support,
they could not be shared with the wider group of members or employers.
In January this year, UCU put forward a new alternative approach, which would
involve an increase in contribution from both staff and employers for a short
period, pending a revaluation of the scheme. The timing of this was based on
the ending of the consultation of USS members on employers’ benefit cuts: the
consultation closed in January. The consultation indicated a very strong
preference from members to protect current benefits. Details of the new
alternative proposal are laid out in this article from 26 January 2022: the
details make clear that the proposals are limited to a temporary increase in
employer contribution to rise no higher than 25.2%, pending a new formal
valuation of the pension scheme.

UUK then sought the views of their members at their 140 universities, whilst
adding their own commentary to the proposals, although there appears to
have been some delay before they did so. A number of elements were
misrepresented to employers, in particular the extent to which the employer
contributions might rise. For a detailed rebuttal of these misrepresentations,
see UCU General Secretary Jo Grady’s response where she confirms that UUK
now accept that there would not be any rise beyond 25.2%, and certainly not
to the 29.1% suggested in Professor Van de Noort’s commentary. A further
commentary is available at ‘UCU proposals for securing the future of USS
following the 2020 valuation’ where UUK’s own override is clarified; also the
explanatory blog by Michael Otsuka, one of the alternate USS negotiators, at ‘A simple means of ensuring that rates are capped at 25.2% and 9.8% from 1 April

As we all know, investments are subject to fluctuations and there are no
guarantees that a future valuation of the pension fund would show an
improvement. Valuations are subject to the oversight of the Pensions
Regulator and are obliged to take a prudent view. Currently, the fund has total
assets of £89.3bn and contributions coming in are greater than the amount
being paid out to members. USS’s own calculations, referenced here in a
Medium post by one of the negotiators show that the calculated deficit fell
from £14bn to £3bn in the period since the 2020 valuation.

Whilst there is obviously no guarantee that a valuation in April 2023 would
show an improvement, the reality is that the indications are clearly favourable.
Further research by staff at Cambridge University challenges the assumption of
any projected deficit and can be viewed here together with a link to a
recording of an open meeting. In the High Court this week, a legal challenge to
the USS directors over the 2020 valuation was raised by a group of academics
and they have obtained court permission to move to a full hearing: see details

We would be very concerned about suggestions that staff might be
discouraged from participating in the scheme.

We will be calling an open meeting shortly for USS members at Reading to
discuss this further.

Kind regards,
Sally Pellow
President, Reading UCU