UUK and UCU trade repudiations on eve of strikes

Both sides continue to debate the scale of the problem facing the Universities Superannuation Scheme and the impact of the employer proposals for pensions

University leaders have appealed to the “silent majority” of academics who will not partake in this week’s strikes as they accuse the University and College Union (UCU) of being hijacked by a far-left faction. 

Tomorrow (1 December), tens of thousands of members of the UCU will begin three days of strikes at campuses across the country over pensions. A simultaneous, separate UCU strike will take place over pay and working conditions.

Fifty-eight universities are to be hit by strikes from 1 – 3 December: 37 universities are to strike over USS; 54 universities are to strike over pay and conditions

Universities UK (UUK), which represents 340 employers that are members of the USS pensions, issued a statement this morning (30 November) describing the situation as “deeply frustrating”. 

UCU plans to reballot 42 universities over the two disputes, including 22 over USS pensions.

For more background on the current strikes, read our coverage from earlier this autumn.

Fault lines over USS pensions 

UUK said that the 20,000 UCU members that voted for pension strikes represent just 10% of active USS members, and only 40% of union members balloted.

Ongoing consultation with those 203,000 active USS members runs until 17 January 2022. UUK appealed to the “silent majority” to have their say, promising that their voices would be heard, and the employer plan – rejected by UCU – was still open to change. 

The three-day strike is the culmination of a fractious 19-month period since the Universities Superannuation Scheme (USS) Trustee conducted a valuation of the pension scheme, finding that the funding gap had widened to £12.9 billion. 

In a report on the shortfall, USS chief executive Bill Galvin acknowledged the short-term impact the Covid-19 pandemic had on UK financial markets and pension investments but warned the scheme faced long-term, structural challenges to the status quo. “Even before Covid-19, historically low-interest rates, increased life expectancy, greater regulation, and volatile financial markets had already made promises of a set retirement income for life more expensive,” he said. 

UUK accused the general secretary of UCU – Dr Jo Grady – of presiding over a disunited union. Members of the UCU negotiating team – from the far-left wing UCU Left – disagreed with the outline UCU counter proposals for pensions. UCU Left also lobbied against Dr Grady’s plans for re-balloting. UUK also continued its calls for UCU to release the detail of its proposal

In a statement, UUK said: “Exactly why UCU refused to inform universities about their proposal, we may never know. But it is notable that two of UCU’s pensions negotiators who are members of the influential UCU Left faction publicly undermined the proposal by expressing strong opposition to it in a blog post. 

“Indeed, there is a pattern of checks on the UCU leadership by UCU Left, who are affiliated with the Socialist Workers Party. Recently, their considerable influence in local branches enabled them to overrule Dr Jo Grady’s preferred strategy for re-ballots and strike action in 2021–22.”

Today, UUK convened a press conference with Professor Alistair Fitt, a member of the Employers’ Pension Forum and vice-chancellor of Oxford Brookes University, and Stuart McLean, head of pensions for UUK, and member of the USS Joint Negotiating Committee.

Asked by University Business if employers felt Grady had lost control, Prof Fitt said: “Not for me to state whether she’s lost control of her union, but it comes clearly across to us that there is a complete lack of unanimity in the way the UCU is behaving.” 

UUK warned that if UCU blocks reforms, all sides stand to lose out. 

Universities, lecturers, and the many other varied USS members, like small research institutes and charities, “face a punishing contributions escalator…to completely unaffordable levels”, it said. 

The union and the employer’s representatives, UUK, continue to contest each other’s figures. 

On the impact of the UUK plan, neither side can agree how worse off the average lecturers’ pension will be. 

UCU says the UUK-proposed changes would mean a typical lecturer could suffer a 35% cut to their guaranteed retirement benefits. UUK said the figures “only tell[s] part of the story”, warning that doing nothing to reform USS would hit the sector and employees with crippling annual contributions, which would lead to job losses, the destabilisation of universities and less take-home pay. Benefits previously accrued are protected, as are some future defined benefits (DB) up to an annual salary threshold of £40,000. 

On the scale of the financial challenge facing USS, neither union nor employers accept what the other argues is the case of change. UUK believes USS could take “a less prudent approach” to its assessment of the scale of liabilities and the financial strength of the scheme – but accepts that it is the Pensions Regulator and not the pension Trustee that sets the parameters of what is and is not acceptable. “The USS Trustee, therefore, cannot use more optimistic assumptions to generate a more desirable valuation,” UUK said. 

The union argues the 2020 valuation was flawed because it occurred during the beginning of the pandemic when financial markets were in freefall: it wants to re-run the process at the next opportunity, with employers in the interim covering the increase in contributions legally required from the USS Trustee. 

Over the past four years, four successive valuations reached a similar conclusion: the scheme is underfunded against strict rules set by the Pensions Regulator, is the judgment. 

Said UUK today: “UCU’s perpetual appeals to a ‘flawed’ valuation methodology and demonisation of both employers and the USS Trustee is nothing more than a smokescreen for their ideologically entrenched opposition to corporate finance, and unwillingness to accept any risk in their own retirement planning – something which the vast majority of the working population has no choice over.” 

Despite the terse tone, Prof Fitt reiterated the hope that common ground was not a mirage. “We’ve had lots of very constructive negotiations with the union. And there are lots of things that we agree on. So, I think regarding negotiations, there’s constructive things have happened. And there are a lot more constructive things that we hope will happen in the future,” he said.

McLean said, on behalf of UUK, that hopes UCU would publish alternative proposals “which recognise some of the pensions challenges” have faded.

“We’ve since seen UCU step back from that, and no proposals forthcoming. And now [the union is] denying the pensions problem. And it’s difficult here to see who’s calling the shots within the union space on this,” he said.

McLean also warned that while the UUK proposals do water down pension benefits, the alternative is far worse. “The flip side with guaranteed benefits is if [investments] don’t come good, we’re in even more trouble than we already are.”

UUK is pursuing long-term reforms for USS, including options for conditional benefits and governance reform.

UUK claims ‘misled’ vice-chancellors

The USS Trustee has published figures showing the UUK proposals – which do not affect historic pension benefits – would reduce the value of pensions on retirement for staff by around 10-18%. 

UCU has this week written to Alistair Jarvis, UUK chief executive, calling on him to stop invoking the figures in communications with vice-chancellors, claiming he was “misleading” them. 

A modeller prepared by USS shows that for a lecturer earning under £40,000 and contributing to a pension since 2018, the UUK plan would reduce the annual value of their pension by nearly a third. 

UUK “strongly refutes” the accusation: it says it is reasonable to quote figures for “middle of the road” lecturers, rather than the example selected by USS of the most adversely affected minority. “We encourage all scheme members not to be influenced by the figures circulating and instead consider their own circumstances and use the USS modeller to see how the changes will impact on them.”

USS Trustee maintains that any new valuation would produce a result slightly worse than the last.

A letter to employers in May 2021 from Galvin explained what impact changes in the financial markets would have on the pension scheme investments.

“Nominal interest rates and asset values have increased, which are positive developments for the scheme funding position. On the other hand, inflation expectations seem to have increased significantly, while expectations for future expected investment returns have reduced – both of which put pressure on scheme funding and contribution requirements,” wrote Galvin.

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