Employers pour cold water on union’s pension plan

Employers say they could not afford the plans for USS pensions put forward by UCU’s Jo Grady, which rest on “unsubstantiated” claims and “hypothetical” outcomes

Universities UK (UUK) has all but disregarded proposals put forward by the University and College Union (UCU) for the Universities Superannuation Scheme (USS), implying the suggestions would prolong the dispute and postpone a solution.

Last week, without warning, UCU announced what it called “serious proposals” for USS that could offer a “route out” of the current negotiating stalemate.

In an intervention today on behalf of 340 employers, UUK chief executive Alistair Jarvis said: “As far as we can assess it, [the UCU proposals] would do little to resolve the dispute.”

Forty-four universities will likely face seven days of strikes in February over the UUK plan for USS. UCU members at 37 universities went on strike for three days last December.

The current dispute centres on the last USS valuation, which took place in March 2020. The union argues that a new assessment of the pension scheme’s financial health would show that the long-term outlook of USS has improved. In the interim, while a new valuation took place, employers and members would pay more to cover the cost of the unresolved obligations of the scheme now demanded of them.

A letter from Mr Jarvis to the UCU general secretary Jo Grady dated 31 January pours cold water on the union’s plans.

He “strongly urge[d]” the union to “consider the proposal”.

Jarvis affirmed that should the Trustee “validate [the UCU] proposal as an implementable solution”, he would formally consult employers. He warned that the 28 February 2022 deadline for automatic higher rates now leaves “very little time remaining to decide on a solution”.

Mr Jarvis challenged “the validity and credibility” of the UCU’s assertions.

Regulatory law governs valuations, he said, adding: “It is not just a matter of making a request to the USS Trustee based on a perception of more favourable funding conditions”.

He attacked the “unsubstantiated” view of the union that a new valuation would deliver a more favourable outcome and called on the union to “make clear” what “coherent case under pensions law” supports its case.

Without a credible case, “it would seem your proposal would serve little purpose other than to delay the reforms the scheme urgently needs to remain sustainable,” he said. Delays would “likely worsen the funding position”, and staff and employers could ill-afford higher contributions for a hypothetical resolution, he added.

The estimated cost of the nearly 4% higher contributions for employers proposed by UCU would amount to £350 million more per annum. To ask them to muster significant extra covenant support (a type of financial guarantee), at the same time as they contribute more to the scheme, is “unreasonable” and “problematic”, going “beyond what many employers would think is reasonable and justified”.

Such a significant rise in costs would impact jobs, pay, student experience and university investment, employees say. Jarvis signalled he was unconvinced many USS members would be willing to pay a higher rate of 11.8% of salary per annum, especially given the fact that 20% of eligible members already opt-out of the scheme.

In November 2021, as UCU prepared for strikes, Jarvis called on the union to publish its detailed alternative to the UUK plan for the 2020 pension valuation, which estimated that the scheme faced a deficit of between £14–£18bn.

Read more: Union plans 10-day strike over pay and pensions

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