We are aware that on 7 April, UUK launched a consultation of employers which closes on 24 May. UUK is asking employers whether they support proposals for benefit cuts, as a response to the extremely high contribution rates and other demands which USS is making in its 2020 valuation. We understand that both employers (UUK) and UCU agree that the 2020 valuation methodology that USS is using, is flawed, and UCU is urging UUK to join the union in robustly resisting the USS approach.
The UUK response so far, unfortunately, has been to largely ‘recycle’ the first proposal that was presented via the ACAS talks when UCU members took strike action in 2018/2019, a proposal which UCU branches decisively rejected [https://www.ucu.org.uk/media/9300/Agreement/pdf/UCU_UUK_agreement_at_ACAS_12_March_Final.pdf]. UUK is proposing to:
-lower the salary threshold where defined benefit (DB) accrual stops from £59,883.65 to £40,000
-reduce accrual (and therefore the size of payments in retirement) from 1/75 to 1/85 -impose a CPI indexation cap of 2.5% (removing the protection of benefits against any inflation above that level)
-keep the contribution rate as it is now (9.6% for members, 21.1% for employers).
Just as worrying, we have been informed via national UCU that UUK is also consulting individual employers on options for addressing the high rates of staff opting out of the scheme. UUK’s preference seems to be a defined contribution (DC) only option which would be aimed at low paid members of staff, provide no guaranteed retirement income, and almost certainly amount to a very poor pension compared with the defined benefits (DB) which USS members have now.
UCU maintains that:
-the contribution increases proposed by USS for the 2020 valuation are unnecessary. This view is supported by UCU’s actuarial advisers, First Actuarial. We understand that UUK and their advisers, Aon, also believe that the rates and other commitments demanded by USS are excessive and unjustified.
-the cuts to defined benefits proposed by UUK are absolutely unacceptable. Even within the current regulatory framework, it should be possible to preserve current defined benefits without an increase in contributions – particularly in contributions for members. This would involve stronger commitments on the part of employers, including not only extra covenant support but potentially also higher employer contributions and/or potentially a willingness to take a bolder public stand against USS and The Pensions Regulator.
In conclusion we seek the following assurance that University of Surrey’s response within the current UUK consultation will press for the continuance of defined benefits for all staff, particularly those on lower wages. In addition, we are requesting written responses to the following questions:
-Will University of Surrey commit to sharing its consultation response? -In terms of addressing opt-out rates, does University of Surrey endorse the DC option preferred by UUK or an alternative?
-Is University of Surrey willing to pay higher contributions than the current rate? -Does University of Surrey endorse the benefits cuts proposed by UUK or not?
-Does University of Surrey want UUK to explore conditional indexation with UCU?
-Is University of Surrey willing to provide more covenant support, particularly in the form of a 30 year moratorium on employer exits?
-Would University of Surrey be willing to consider legal action against USS/TPR?
In light of the current UUK consultation timeline, we would appreciate a formal written response before the 12th May. We shall be circulating any response to our members.
Thank you
Kind regards
Surrey UCU Committee