Latest USS developments

I wanted to update you on latest developments regarding the Universities Superannuation Scheme (USS).

1. Members will recall that the joint expert panel (JEP) made its first report in September. It recommended a number of changes to the 2017 USS valuation which, if implemented, would protect members' pension benefits at a cost (29.2% contributions) significantly lower than that originally proposed by USS (36.6%). JEP also proposed a further report which would seek to identify principles to underpin future valuations. More on JEP's recommendations here. 

2. Before the JEP reported, USS invoked rule 76.4. As we commented at the time the proposed increases in contributions that result from this will be phased in to protect the current level of pensions benefits in the absence of an agreement between UCU and Universities UK (UUK) the proposed increases in contributions that result from this will be phased in to protect the current level of pensions benefits.

3. The union's formal policy is that any outcome should provide no detriment to UCU members. The superannuation working group (SWG) which is the body that negotiates with Universities UK (UUK) welcomed the JEP report as 'a significant and impressive piece of work' and stated that its recommendations should 'form the basis for negotiations'.

4. Following its own consultation with employers, UUK has also now agreed to support the recommendations of the JEP and stated that employers are prepared to take more risk in order to reach a settlement subject to further detail on the trustee's requirements for managing increased risk.

5. USS has proposed that in order to address some of the issues that arise from JEP, there should be a fresh '2018' valuation, from which revised employer and employee contributions can be agreed. They will shortly begin a consultation with employers, which will end in February 2019, on what should underpin that new valuation.

6. The Pensions Regulator (TPR) has now written to USS to say that it is still of the view that the covenant is tending to be strong. TPR say that if, arising from the employers' new position, contributions fall, then the trustee should seek concrete guarantees as to how the downside risks of the new approach should be managed. This would involve a contingency agreement to pay more over an agreed timespan should the position of the fund worsen.

7. During discussions with USS, UCU's position has been that the JEP should be implemented in full.  The employers are also supportive of a JEP based outcome. The USS Trustee Board met again last week and its position on the JEP proposals, and the 2018 valuation, will be made clear in the Technical Provisions consultation report which is due to be circulated to UUK in the coming days and to employers thereafter.

8. The JEP is now beginning to scope its work on the underlying issues with USS in line with the agreed terms of reference to see if a joint approach to future valuations can be identified which will have the confidence of the stakeholders. This will of necessity include discussion on issues of governance and process. This report is not expected until after the 2018 valuation is finalised in June 2019.

9. From UCU's perspective we will continue to argue for the full implementation of JEP. If we are not persuaded by the trustee's arguments with regard to some of the JEP recommendations we will endeavour to work with the employers if possible to persuade the trustee to change their mind. We have written to the trustee to this end. We are also closely watching how the discussion between UUK and USS on contingency payments develop not least since this will have an impact upon final proposals made with regard to USS contributions. Along with UUK we have called for maximum flexibility in this regard.

10. The union's negotiators will pursue all these points over the next crucial period keeping in mind our central aim which is to protect and defend your current pension benefits. There is widespread agreement within the union that, once we reach a settled position, it should be for members to decide what steps to take including whether they wish to resume industrial action.

From the above I hope you can clearly see the work that the union is undertaking to protect members' interests. We have come a considerable way since this time last year when we faced a proposal to eliminate the guaranteed pension at a lifetime cost to the average member of £200,000.

The establishment of the JEP was won on the back of your industrial action. The JEP panel's report has already proved to be a real catalyst for further progress and we will work hard to ensure its continued credibility as an independent body.

We do have more work to do to achieve a positive outcome. However it is important not to underestimate members' achievement in turning back the tide which has swept away the guaranteed pensions of so many other workers.

I will write again in the New Year with a further update.

Matt Waddup
UCU national head of policy and campaigns