All posts by Colette Maxfield

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Open letter to USSU from Surrey UCU re USS

Dear University of Surrey Students’ Union

You may not be aware that there is a formal UCU Ballot taking place at the moment, UCU members are voting on whether to take strike action, or action short of a strike. This ballot runs until 19th January and is a response to the drastic proposal that the employers (UUK) have made on staff pensions (USS).

UUK are proposing to change the pension from a guaranteed return (defined benefits scheme ) to a gamble on the stock market at the point of retirement (defined contribution scheme), and this is especially concerning for early career academics who have not accrued defined benefits over a long career. If UCU allow this to happen, university graduates also entering academia as employees will inherit a very poor deal.  UCU members also have significant concerns over the claim that the current scheme is in deficit, a claim only generated by a valuation which assumes that the entire HE sector will end on an unspecified date, and that no new University staff will therefore be paying in to the USS scheme.

We are aware that the employers are divided on this proposal, and that the VCs at Warwick and Glasgow are supporting guaranteed pensions and UCU:

The VC at Warwick states that he is ‘mystified’ at the stance taken by UUK:

http://blogs.warwick.ac.uk/execteam/entry/which_way_forward/

The University of Glasgow has stated that it would prefer to keep a Defined Benefits Scheme and ‘The University believes that its interests are aligned with those of the UCU and that all parties should work together constructively to identify a solution. It is, of course, for members of UCU to decide how they vote in the ballot.’

https://www.gla.ac.uk/myglasgow/news/headline_561539_en.html

As the University of Surrey Member of UUK, the VC here has not revealed his stance. If you would like more clarification on this issue, do please take the time to support your lecturers and write to him requesting this information. Your support would be much appreciated and it may help turn the tide on this dispute. UCU are of course hoping that negotiations will become more productive and no action will therefore be necessary. Your support could make all the difference.

Thank you

 
Surrey UCU Committee
News, Posts

More USS FAQ answered:

 
1. What is the impact of the employers’ proposals on staff?
Taking like for like, the proposal to end guaranteed pension payments would mean a loss more than £200,000 over the course of a retirement for a typical member of staff. While it is impossible to be precise about the impact because your pension would be subject to the performance of the stock market, the independent analysis produced for UCU uses the market predictions made by USS itself. It showed substantial losses for all fourteen different staff profiles that were tested, mostly in the range of between 20 and 40%.
2. The employers proposed this – have they published any analysis?
UUK have finally published an analysis of the impact of their proposals produced by Aon. Their headline is that for current members, retirement income losses will range between 10 and 20%. However, their analysis includes your state pension and this has the effect of superficially reducing the impact. The analysis also does not use the USS market predictions, preferring a more upbeat assessment from Aon and this also superficially reduces the loss. Even on this very favourable (to the employers) basis, it is worth noting that for a typical new starter there would be a 25% reduction in the estimated annual benefits provided by USS. You can read the employers’ analysis here.
3. Whose figures should I trust?
The analysis independently produced for UCU is based on the market estimates made by USS itself. Our analysis does not include aspects which are beyond the scope of USS such as the state pension. While any market estimates are subject to error, it is odd that the employers have chosen not to use USS data for this exercise when they have based their claims that current pensions are unsustainable upon them. One surprising aspect of the recent publication of UUK’s analysis is that the employers clearly had not done any modelling of the impact on members of their proposals before they tabled them on 13 November.
4. Can you explain the significance of 18 December.
The Pensions Regulator (tPR) says that USS must have resolved its issues by 30 June 2018. USS have said that to achieve this deadline, negotiations need to conclude by 18 December. UUK have also said that they will not negotiate beyond this point. UCU disagrees with this. We believe that this is a serious issues for thousands of staff and that negotiations which will affect people’s retirements must not be rushed. We have called for negotiations to be extended and for USS to flex its own internal deadlines to allow this. We have also met tPR and were pleased that in a letter sent to UUK this week tPR said that while they expect adherence to the statutory deadline of 30 June 2018 ‘we are mindful that in complex and late stage negotiations some slippage in timelines can lead to better outcomes.’
5. Are there any negotiations at the moment and what is UCU saying to the employers?
UCU is meeting the employers this week. While we have challenged the valuation methodology used by USS, our main current priority is to defend the principle of the guaranteed pension – what is called a ‘defined benefit’. We are challenging the employers on their assertion that they will not pay more to support USS, even though their expenditure on staff as a proportion of expenditure has fallen massively in recent years. UCU is modelling a range of outcomes to see which are best for members and we will make counter proposals at the appropriate point but we will not be drawn into a public game on the employers’ terms which in effect would accept that your pensions have to fall substantially.
6. Can the employers really afford to pay more?
An analysis carried out for USS in 2017 concluded that “most employers could afford an increase in contributions from the current 18% of pensionable salary to 21%, albeit not without changes to business plans and/or prioritisation of pension contributions. Many would also be able to afford up to 25%.” UCU believes that in addition to providing financial security for staff, USS is also a powerful recruitment and retention tool and is worth investing in – not least because the rival Teachers Pension Scheme already offers substantially better benefits.
7. What are the prospects for a breakthrough?
 
UCU will keep playing a constructive part in negotiations but we must all prepare ourselves for the eventuality that on 18 December the employers will walk away from talks and the current proposal will be imposed.
8. What happens next if the proposal is imposed?
UCU’s current ballot is about your employer’s failure to reach an agreement with us to protect your pension benefits. In the event of imposition, we will seek such agreements with each USS employer. We are very determined to achieve justice for you but our ability to achieve this will depend on UCU’s ballot result. If we win the ballots, we will launch the most sustained campaign of industrial action seen in universities until your employers agree with us how they can make good your pension losses.
9. Why does the union need a 50% turnout in the ballot?
The 2016 Trade Union Act states that without a 50% turnout, unions cannot take action even if 100% of members who vote, want to strike. It is unfair and designed to make it hard for unions to defend members so whatever your views please use your vote.
10. I haven’t received a ballot paper and have ordered a replacement which hasn’t arrived yet. What should I do?
Don’t panic – the union is committed to ensuring that everyone who wants to vote, can vote. Electoral Reform Services (ERS) sends out replacement ballots regularly. Because this is a legal ballot, in a few cases where information provided is incomplete, they are not able to send a replacement. On Monday 8 January, we will issue a widely publicised final call to every member who does not have a ballot paper to claim a replacement. If you have not received a ballot paper by then, please order one at that point.
11. I ordered a replacement ballot paper and then found my original – what should I do?
Use one of the ballot papers to vote. Discard the others. If you vote twice in error, don’t worry. Only your first vote received by ERS will be counted.
12. Can I join the union and get a vote?
Yes. If you join on or up to 12 January, we will ask ERS to send you a ballot paper.
13. What kind of strike action is UCU proposing in the New Year?
 
UCU believes that only sustained strike action will move the employers significantly. We are proposing nationally coordinated action initially aimed at shutting down lectures and classes, including a refusal to reschedule any lost due to strikes, throughout February. Further action beyond that point may also be needed. The union is trying to be honest with you about what it will take to defend your pension and if you deliver the mandate we will make sure the action takes place.
News, Posts

USS Joint Negotiating Committee update

The USS Joint Negotiating Committee meeting has continued today after a full day of discussions yesterday.  After threatening to impose the proposal on the 18th December,  negotiations will continue now till 23 January, meaning the negotiation team has won a small battle. A decision will not be taken by UUK until after the result of the strike ballot – and it may well be our threat of sustained strike action which has made them pause for thought, so this makes it ESSENTIAL that we get as many votes as is possible in the ballot. 
The employers have now prepared modelling of what pensions would look like following the proposed changes.  The link is here –http://www.employerspensionsforum.co.uk/sites/default/files/uploads/aon-hewitt-modelling-proposed-uss-benefit-changes.pdf.  Page 3 is the good one, but do read through carefully.  You’ll see that in every single example, the projected annual pension income, for any group, is significantly less than it would be on the current basis.  And remember that this is the document commissioned by UUK, in support of their argument.  In addition, their analysis includes your state pension and this has the effect of superficially reducing the impact.
 
Worse still for their argument, the base calculations that they’ve used are not the same ones as have been used by USS to model the pensions going forward for the benefit of the pensions regulator – they’re better figures.   In other words, UUK insisted on sticking to a valuation of the pension scheme which they’ve claimed makes it unworkable: but they have then used different figures to predict what your pension would be if they managed to force through their changes – and the final outcome is still startlingly bad….  Mike Otsuka of LSE has put up a new blog post which analyses the analysis – https://medium.com/@mikeotsuka/uuks-actuary-s-best-estimates-eliminate-the-uss-deficit-33dad2afc24b

 and his conclusion is that if the (better) figures used by Aon in the analysis above were to be applied to the overarching fund, then there is no deficit! He writes:

 
‘Remember that modelling by UUK’s actuary which is meant to show how well we’ll do under their proposed shift to 100% DC? It turns out that if that actuary’s same rosy picture of investment returns is applied to the valuation of the DB pension scheme, there would be no need to shift to DC in the first place!’
News, Posts

Q&As re USS, answered by UCU National Pensions Official

  1. What effects would the proposed changes to the USS pension have for early career academics?

Early career staff will be the most affected by the changes as they have less built up in the current scheme. They are also more likely to be on less secure contracts. Whatever anyone has built up in the current scheme up to April 2019 will be protected however, going forward under the current UUK proposals they will have no further benefits built up in defined benefit (annual pension linked to salary and service) but will be built up in defined contribution (what you pay is defined but outcome dependent on stock market) which will be a cash sum from which you would have to drawdown until it ran out or buy an annuity (pension) which is very expensive.

2. How do the proposed changes compare to what is happening to pension systems in the private sector, where investment funds are a common pension vehicle even for third sector employers?

Very like private sector pensions in that the build up is in defined contribution but the death in service and ill health will continue to be defined benefit.

3. Do we know in what kinds of investments our pensions will be held in, if the changes go ahead, and do employees have any control over these investments?

Thousands of members already build up a defined contribution pot in USS either as an extra and by taking the ‘match’ as a way of getting an extra one percent from employers or if they earn over £55,500 and all salary over that is pensioned as defined contribution. Currently there are 6 choices for members 2 lifestyles (one ethical) and one other ethical but this would expand.

4. I was wondering if it were possible for USS members to have their contributions paid into TPS. If not now, in the future?

This is an idea we would be happy to explore but it’s not under discussion at the moment.

5. Has the Union produced detailed data of the potential impact on members at different stages of their career i.e. 25, 35, mid-career and say two to three years before intended retiring date?

The First Actuarial report shows the impact on 12 hypothetical members at different career stages:

http://www.ucu.org.uk/media/8916/TPS–USS-no-DB-comparison-First-Actuarial-29-Nov-17/pdf/firstacturial_ussvtps_nodb_29nov17.pdf?utm_source=lyr-ucu-members&utm_medium=email&utm_campaign=members&utm_term=uss-all&utm_content=Your+pension+under+attack

 

Short version:

https://www.ucu.org.uk/article/9093/Overhaul-of-university-pensions-could-leave-staff-200000-worse-off-in-retirement?list=1676&utm_source=lyr-ucu-members&utm_medium=email&utm_campaign=members&utm_term=uss-all&utm_content=Your+pension+under+attack

 

  1. What alternatives are UCU proposing?

Under discussion but will be governed by conference policy

 

  1. In the event that we do go over to a defined contribution pension, why should the university contribution be 18% to our 9%? (8%, it is only 9% with the match which will go)

That amount was based on what was needed to support our defined benefit pensions under the USS. (The employers envelope is 18% (until 2020) out of that is deficit recovery, charges, admin, money to keep the defined benefit paying out assuming the employee contributions are not going in; anything left will go into the individual DC pot and all the employee 8% will go into their individual DC pot. The individual will probably get an option to pay less in, which may be attractive to those who feel 8% is too high.

In 2011 the employers only wanted to pay 10% into a DC pot, the current offer is slightly more but the closed defined benefit section will eat money.)

Now that the money would no longer go to that, the amount they provide needs to be enough for us to have a sensible pension given expected returns. If this is above 27%, then they need to contribute more. Can such a calculation be done to determine what they would need to provide to be used in negotiations?

They don’t think they need to give you enough for a sensible pension they say they won’t contribute more, not can’t, won’t.

 

  1. In the event that we do go over to a defined contribution pension, can we get a non-negotiable guarantee that the universities will indefinitely contribute 18% (or whatever the final amount is) of our salaries into a defined contribution pension? I am concerned since currently the universities pay 18% to our 9% since that it what the USS needed to pay our pension. If the universities are no longer liable to support our pension, what is stopping them from slowly reducing their contribution to our pension?

They only ever promised 18% to 2020 and signaling they will reduce but as the Defined Benefit has no member contributions going in it will be very expensive.

 

  1. In the event that we do go over to a defined contribution pension, what fraction of the contribution will go towards supporting the defined benefit pensions? If this is any number above 0, why should we be responsible for supporting other people’s benefits? (Anyone in now will have benefits building up until 2019 not just other peoples.)

How can we be guaranteed that none of our money is used to support a defined benefit pension? Your money will go into your pot you can see it on the Investment Builder login.  Yes the employer will have to pay a lot to keep the DB section, they have a legal duty to pay out pensions already built up.

 

  1. In the event that we do go over to a defined contribution pension, why should USS be the one to manage it? For whatever reasons, they have shown that they are unable to manage our pensions effectively. I don’t see why we can’t get another company to do it.

Good point one that has been made. However, because it’s so big it can buy investments cheaply and the employer will pay member charges for most options and admin. It is up to the employer not a member what scheme is on offer in a workplace. An employer will only pay in to the one scheme per group of employees so it’s that scheme or no scheme.

 

  1. In the event that we do go over to a defined contribution pension, what happens to our matching 1%? Will this carry on or be removed?

Whatever happens the match will be removed probably around April 2019. Make the most of it.

 

  1. What kind of pensions are the leaders of the UUK on?

UUK and USS staff like UCU staff are all in USS. The Vice Chancellors and such are usually earning too much to pay into a pension there is only so much you can pay in for a lifetime if not they are in USS.

 

  1. What happens if all junior members of the USS simply pull out?

They would love it. It would save employer contributions and not have to provide an alternative, if it is DC it can run as well with 3 people its all about individual pots.

 

  1. If the future accrual of the defined benefit portion of our pensions is set to zero, what does it mean to keep the death and incapability benefit? Do our partners or dependents somehow get our defined benefit pension if we die young? If so, how is that pension calculated?

In the current UUK proposals Death in Service and Incapacity will remain defined benefit in most DC schemes there would be a lump sum. How this would be calculated is yet to be discussed.

 

  1. In the news, I keep hearing that the issue with the USS all comes down to how future risk is assessed and that since universities are long standing institutions, there is no problem in the long run (e.g. https://www.timeshighereducation.com/blog/uss-pension-changes-would-be-disaster-universities-they-are-preventable). Are the universities being unreasonable about this and if so, how can this be remedied? Can we use a 3rd party to give a fair assessment of the risk to be used in negotiations?

We have tried and taken our Actuaries, First Actuarial into meetings. No success.

 

  1. How do the changes affect those who are already drawing a pension?

No change

 

  1. How do the changes affect those who are on a flexible contract and drawing a fraction of their pension from USS?

No change on pension and same impact on pension building up as other members.

 

  1. Re the new pensions scheme, does this work like the Premium Bond system where one gets the capital (i.e. amount invested back) and then any gains on top on date of retirement or is the whole amount at risk and what you get back depends on how the market is doing on the day one retires?

The whole amount is at risk.

News, Uncategorized

Redressing the balance: Employer stances on UUK proposal re USS

We warmly welcome the public statements made in support of staff pensions by Warwick and Glasgow Universities. It is clear that the very detrimental proposed changes are not supported unanimously within UUK, nor do all employers consider the current proposal to be necessary.

 

The current UUK proposal is to move USS from a defined benefits scheme (determined and guaranteed by your ‘career average’ earnings) to a defined contribution scheme (where your money is no longer guaranteed, but dependent on the stock market investments at the point at which you retire).
The VC at Warwick states that he is ‘mystified’ at the stance taken by UUK, and that ‘Whatever happens we will not let the current increasingly conservative approach to USS go unchallenged’:

 

The University of Glasgow has stated that it would prefer to keep a Defined Benefits Scheme and ‘The University believes that its interests are aligned with those of the UCU and that all parties should work together constructively to identify a solution. It is, of course, for members of UCU to decide how they vote in the ballot.’
News, Uncategorized

Your USS vote and TU legislation

You should be receiving your ballot paper later this week.

We understand that there is a large amount of technical language involved with the current UUK offer on USS but at heart this is a very simple dispute: the offer on the table at the moment is detrimental and the only way to change the terms of the offer is if members are prepared to take action.

Due to recent changes in Trade Union legislation we need a 50% turn out at this Branch in order to take any form of action. We are at the point where every vote really does matter.

It is unusual for University managers to communicate with members about potential trade union action during a ballot, as this could be interpreted as trying to influence the vote, but if you receive any communications that you are uncertain of please get in contact.

As we regard changes to pensions as an exceptionally serious issue, members are encouraged to ring the TU office on 01483 68 2323. We will be putting aside an hour every Friday, between 10:30 – 11:30, to discuss the UUK offer with members. More technical queries will be forwarded to our National Pensions Official, and we are currently collecting FAQs for her to answer. Please email these queries to: [email protected]

Surrey UCU is committed to keeping members informed every step of the way, please do not hesitate to get in contact if you are unsure of anything.

News

UUK proposal on USS in a nutshell

We are aware that recent proposed changes to the USS Pension may be difficult to digest. Our National Pensions Official visited our Branch last Friday and plainly outlined some of the issues. You will also have received an all-staff communication from the University today on the current UUK proposal:

UUK proposed that for future service the current hybrid scheme salary threshold will be modified so that there is no further defined benefit accrual. Instead, it is proposed that there will be a “market-leading” defined contributions scheme (through the USS Investment Builder) for all members.

To be very plain, the employer offer currently on the table is to move USS from a defined benefits scheme (determined and guaranteed by your ‘career average’ earnings) to a defined contribution scheme (where your money is no longer guaranteed, but dependent on the stock market investments at the point at which you retire). This means that the employers are intending to move all risk on to you as an employee.

We will also be collating and anonymising your USS related questions for our National Pensions Official to answer, so please forward any queries that you may have to: [email protected]

UCU will be balloting formally on this issue very shortly, please read UCU updates as they arrive so that you are prepared and informed. Surrey UCU will keep you as up to date as possible.

News

Result of ‘Defend pensions’ ballot of USS members. October 2017

Message from Sally Hunt:
 
I wanted to let you know about the result of the ballot.
 
86.6% of members who voted said they would be prepared to take industrial action to defend USS pension benefits on a turnout of 55.8% of those eligible.

This turnout – if replicated in a statutory ballot – well exceeds the 50% turnout requirement set by the government as the minimum legal requirement.
 
Thank you for your support of the union. Later today, your elected negotiators will begin detailed talks with the employers. No one should be in any doubt about the difficulty of the task they are undertaking on your behalf.
 
Universities UK (UUK), which represents the USS institutions in these negotiations, recognises that institutions have the ability to pay extra in order to safeguard existing benefits. However so far they have said that this is not an option and unless we can change their minds or persuade both UUK and USS itself to adjust their valuation methodology, detrimental change is inevitable.
 
Some employers have even signalled that they wish to move wholly to a scheme in which your pension income will be dependent on what returns if any there are from the investment of your contributions in the stock market – in essence a pension with no guarantees.
 
I hope our ballot result concentrates the minds of your employers. All we want is for them to stand up for staff and help us to protect your interests in the fund rather than look away while benefits are cut.
 
Be in no doubt that I and colleagues will try to solve this difficult dispute but if we need to seek your support for action it is good to know that you are with us in such large numbers.
 

News

Response to valuation of the University Superannuation Scheme

In response to the information circulated by the University recently concerning the valuation of the University Superannuation Scheme, our former Surrey UCU Pension Rep is happy to share his consequent response to the University:

I believe that USS is using the same Gilts plus methodology for valuation which they used in 2014 therefore it is not more optimistic. It is also more pessimistic than USS’s best estimate of future returns on their investments. 

Independent studies, and I believe those of USS’s consultants, have verified that the required funding gap is within the employers ability to pay but may not be in line with employers willingness to pay. It all revolves around how much employers value their employees across the whole range of the salary spectrum.

Report for UCU: Progressing the valuation of the USS. 15 September 2017. The First Actuarial report prepared for UCU as a response to the USS’s consultation document, also concludes:  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 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 break even returns of 1.36% pa real CPI on past service and 1.85% pa real over CPI on future service are well below the expected returns on equities and property. The likelihood that the USS can achieve the break even returns is high. If the actual performance achieved exceeds the break even returns, the funding level will improve. Any funding level could be achieved eventually, given time. The cost of longevity improvements should be partially covered by the link of the USS’s NPA to SPA. At some point, there may need to be an adjustment to the balance of the contribution rate and the benefits to respond to improving longevity, but this point is not imminent. Subject to this point about increasing longevity, the cash flow analysis does not show any need to increase the contribution rate. The employers should be able to regard their current contribution rate as reliable. Making the same point the other way around, there is no need to reduce members’ benefits. Full report: https://www.ucu.org.uk/uss?utm_source=lyr-campaignupdate&utm_medium=email&utm_campaign=members&utm_term=_all-members&utm_content=The+Friday+email:+22+September+2017

Urgent announcement from Sally Hunt: A major university (Southampton) has become the first to publicly call for current USS pension benefits to be wholly replaced by a defined contribution scheme. Forget the pensions jargon. What this means in simple terms is that rather than being based on scheme rules as now, your annual pension will be completely dependent upon what returns your monthly USS contributions can get from the stock market. If other universities follow suit, UCU will need every member to stand together with the union and say NO.

Please also find the following information on USS which may be of use:

Request a replacement USS e-ballot. The ballot to defend the USS pension is currently open. If you haven’t voted please vote now. It’s crucial that we show that members are prepared to defend their pensions so please check your inbox (and junk box) for the unique link UCU has sent you and let UCU know if you can’t find it: https://yoursay.ucu.org.uk/s3/USS

USS Posters: show your support. If you’ve already voted why not put one of the new UCU / USS posters up on your door. Please download here: https://www.ucu.org.uk/uss?utm_source=lyr-campaignupdate&utm_medium=email&utm_campaign=members&utm_term=_all-members&utm_content=The+Friday+email:+22+September+2017

We will keep you updated as and when we receive more details –