Thank you for your detailed and courteous response to our Open Letter dated 26th January. We appreciate the time you have taken to explain your stance within UUK when representing the interests of your staff at University of Surrey who are members of the USS pension. We agree with you that this is indeed a very complicated and serious issue.
Due to the urgency of the situation we feel a responsibility to our Surrey UCU members, at this critical stage, to request further information on the following points:
We understand that the valuation that you reference when claiming that the scheme is currently in deficit is contained within the USS consultation document (‘2017 Actuarial Valuation: A consultation with Universities UK on the proposed assumptions for the scheme’s technical provisions and statement of funding principles’). As you will be aware, UCU strongly contested the methodology of this valuation and commissioned actuarial advice which was published in September 2017: https://www.ucu.org.uk/media/8705/Progressing-the-valuation-of-the-USS-First-Actuarial-Sep17/pdf/firstactuarial_progressing-valuation-uss_sep17.pdf
The conclusions of this document were:
The current employers’ contribution rate of 18% of pensionable pay, of which 15.1% goes towards defined benefits, is prudent. The asset income which is required, in addition to contributions, to pay the benefits in 2 www.ucu.org.uk full is low. Indeed, in a scenario of “best estimate” pay rises, the benefits of the USS can very nearly be paid from contributions, without reliance on the assets. We can be very confident that the scheme is not vulnerable to forced disinvestment.
We can be very confident that the cash flow in will meet benefit outgo for the very long term, so in the mean time fluctuations of market value or the pension scheme’s balance sheet are of low importance…The USS does not have negative net cash flow and is not likely to have in future (subject to dealing with increasing longevity, as already noted). Cash and short dated investments are not needed to meet net outgo and to protect against forced disinvestment. Unfortunately, we understand that UUK insisted on supporting the original USS valuation. It is with consternation, then, that we witness UUK promoting the Aon modelling of the current proposal, as the Aon modelling uses higher, more optimistic estimates than those previously used by USS. Can you please explain to us whether you yourself believe this to be inconsistent, and also could you please explain why UUK have not subsequently called on USS to use these more optimistic figures when valuating the current scheme?
An additional concern with the Aon modelling (additional to the fact that in every single example, the projected annual pension income, for any group, is significantly less than it would be on the current basis) is that it contains the assumption of a state pension. We note that the current individual modelling that USS members can access does not include the state pension. Can you please state whether you believe this to be misleading as including a state pension superficially reduces the impact of the proposed changes? Can you also state whether you have voiced concern within UUK on behalf of your staff members who will not receive a UK state pension and for whom current example projections should have been modified?
You have stated that employers are not looking to reduce their payments and that these proposed changes are in line with leading UK organisations. We note that staff members in industry can earn much higher wages than staff in the HE sector and that traditionally, the security of the pension was a pay-off that attracted potential employees into academia. This is all the more important as the uncertainty surrounding Brexit continues, raising issues such as HE staff recruitment and retention.
We express our regret at your claim that there is no time for further negotiations to take place, especially since UCU are urgently calling for further negotiations in order to avert strike action. We hope that you will explore every possibility to continue the talks on behalf of your staff here at the University of Surrey. Please consider the approach and action taken by the VC at Sheffield:
I wanted you to know that my position is that all sides of the national debate should continue to talk, to explore the problem and the potential solutions and to seek a way forward which satisfies all parties. Given disagreements about the value of the USS fund at the heart of these issues, I would support calls for the Pensions Regulator or another agreed third party to independently value USS against international benchmarks of similar schemes. I hope this may allow some crucial time and the ability for all to return to the table.
www.ucu.org.uk In contrast to this approach, suggesting that your staff members engage with consultation rather than take part in industrial action whilst also implying that, not to go with the new proposals will cause ‘significant’ staff cuts, is a punitive tone that we had hoped University of Surrey had moved away from. We would therefore welcome a dialogue which openly discusses the priorities of the University, with the three recognised trade unions and USSU.
We are very pleased to hear that yourself and the Executive Board have been supporting the attempts being made by all parties to reach a mutually agreeable outcome in the pension discussions. It would be a great comfort to our members, and to staff members here at University of Surrey generally, to hear how this support has manifested itself, and what actions you have taken to further a mutually agreeable outcome which is unfortunately not yet in sight.
We would also like to add that we will be sharing this open letter with our Surrey UCU membership alongside your previous response in a spirit of transparency. We thank you again for engaging with Surrey UCU at this extremely critical point in the USS dispute.
The Surrey UCU Committee