Employers reject union plan for USS pensions

Universities have rejected the union plans for a new valuation as strikes enter their second week

A consultation with employers in the Universities Superannuation Scheme (USS) on union proposals to re-run the 2020 pension valuation process has concluded – with all but four rejecting the proposals.

A statement from Universities UK – which represents the views of the 340 USS employers – was released on 20 February.

The short consultation on the plans put forward by University and College Union (UCU), conducted between 11 and 18 February, elicited feedback from 97 employers. All but four rejected the union plan, while one employer supported the union plan and three expressed conditional support.

Those 93 employers in disagreement employ 92% of active employees in the USS. No further details, nor a more comprehensive statement, have yet emerged. – but one is expected.

The results mean it is unlikely the union plan for the 2020 valuation can proceed beyond the Joint Negotiating Committee, which comprises equal representation from the union and employers and must debate a way forward.

The UCU plan emerged on 26 January, offering a “route out” of the beleaguered 2020 valuation. On 10 February, the USS Trustee confirmed there was no “operational impediment” to the union plans. It later clarified that the union plan could only proceed if employers agreed to offer extra covenant support, a form of insurance for pension liabilities, and a scheduled “of escalating member and employer contributions” for at least a year.

The union wanted employers and employees to pay higher contribution rates to the pension scheme for a year while the USS Trustee conducts a brand-new valuation of its assets. It hopes that a 2022 valuation would find that the long-term financial outlook of the scheme has improved, negating the need for cuts to pension benefits.

After the union disclosed the details of its plan, employers were quick to suggest it did not look like a serious attempt to find consensus and “would do little to resolve the dispute“. The consultation results revealed yesterday are, therefore, not a surprise.

Even after the employers rejected the plan, UCU has today continued to argue a new valuation is needed. It says the value of assets has recovered since March 2020 and there remains “no justification for pension cuts”.

The value of USS assets has, the Trustee confirmed, increased since the last valuation in March 2020 – but so too have the costs, making it “very difficult to reach any definitive conclusions”.

In a briefing, the Trustee said: “The contributions required for promising a set, inflation-protected income for life in retirement, paid no matter what happens to the economy or the HE sector in future has continued to rise.

“Financial markets have exhibited significant volatility, and the challenge remains steering an appropriate course for the long term.”

Although the deficit may have reduced from £14.1bn to £2.9bn in the two years since the 2020 valuation, the Trustee has said this reduction is only possible based on reforms put forward by employers. Were they and crucially the proposed annual inflation protection cap from 2025 abandoned, the current deficit would be £7.3bn.

Read more: Ten days of university strike action begin

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