University leaders make formal commitment to working with UCU on long-term USS pension scheme reform
University leaders have written to the University and College Union [UCU] to formally outline their commitment to continuing to work with UCU to deliver long-term reform of the Universities Superannuation Scheme [USS].
At a media briefing held today, USS employers highlighted the various steps they have taken to keep benefits at the same level and protect the value of pensions for their staff, and their work with UCU over the last eighteen months.
Together with UCU, USS employers have commissioned advice from a Joint Expert Panel [JEP] and used its recommendations to keep costs down. The second report of the JEP, which will be published soon, will also include options for long-term reform, including looking at valuation methodology and shared valuation principles for the future.
USS employers also highlighted that here has been a 50% increase in the level of employer salary contributions to USS over the past decade (14% in 2009 to 21.1% in 2019). To ensure member benefits are protected in full, employers are paying 65p in every pound of the increased salary cost, an extra £250 million per year. Scheme members are paying in 35p in every pound in increased costs, which works out at £7 per week for those on the average salary.
Carol Costello, speaking on behalf of USS employers, said:
“It is not possible to change the 2018 valuation outcome, but many USS employers and scheme members want to see changes to the USS valuation methodology and scheme governance ahead of the next valuation in 2020.
“The Joint Expert Panel will soon publish its second report, including options for new methodology for assessing the financial health of the scheme. This should be the springboard to stepping up discussions which we hope will lead to greater confidence in the valuation process and governance arrangements. We are calling on the union to work constructively with employers to deliver positive long-term changes to the USS scheme.
“Under pensions law, the scheme needs more money to keep benefits at the same level – which has always been a key demand of the UCU. Many institutions will not be able to afford a higher share of the contributions, and the costs and risks of this scheme are shared equally by all. We will continue to talk with the UCU, as we have done over the last 18 months, on a joint and fair solution to this pensions dispute.”
USS employers have identified these areas of common ground which they want UCU to support employers on.
- reaffirming our commitment to receive positively the recommendations from the Joint Expert Panel’s (JEP’s) second report, and – after seeking views from members and employers – agreeing jointly a set of reform proposals;
- using our collective influence to make the case to the USS trustee and, if necessary, The Pensions Regulator [TPR] that they be accepted;
- using our collective abilities to persuade the USS trustee and TPR of the merits of a longer-term view on risk for USS and its sponsoring employers, something which has the potential to ease pressure on contributions (and on which we have jointly made good initial progress via a joint working group);
- an employer commitment to work with both UCU and USS to consider replacements for valuation methodology (test one) ahead of the 2020 valuation;
- being fully committed to enhanced transparency so that wherever possible information on the scheme is shared with the widest stakeholder audience;
- reaffirming the employer view that it is necessary and appropriate for the JEP to consider governance reforms and for the recommendations which it brings forward to be openly consulted upon;
- to work together to consider candidates for the JNC chair, jointly appointing a successor to Sir Andrew Cubie, and to encourage closer working between the JNC and the USS Trustee board;
- to use the resources of employers to provide evidence and backing to support the enduring status of the USS covenant which stands behind the defined benefit promises;
- taking all reasonable steps to avoid future contribution increases for USS members or employers.