Suspended USS board member questions ‘quality’ of pension scheme’s calculations

In an interview with the Today programme, Prof Jane Hutton said: ‘what I have seen is not of a quality I am happy with’

Prof Jane Hutton has questioned the “quality” of the Universities Superannuation Scheme’s (USS) financial projections.

Concerns have been raised about the discount rate the pension scheme is using to calculate its liabilities.

In an interview with Today on Radio 4, Hutton said: “I have been trying since November 2017 to get enough information to evaluate that [discount rate]. I’m an internationally recognised statistician, that’s why I was appointed to the board, and I’ve simply not been able to get the information I require to satisfy myself of the quality of the work. What I have seen is not of a quality I am happy with.”

Hutton served as a USS board member representing the University and College Union until she was suspended in June 2019.

As far as I can tell, one of the main reasons was that I asked the Pension Regulator whether a statement attributed to them by USS was something they were happy with – Prof Jane Hutton

“My lawyer asked on June 5 in a letter for precise details on why I had been suspended, we haven’t received those yet. There are simply allegations of misconduct, but those allegations have not been given in detail.

“As far as I can tell, one of the main reasons was that I asked the Pension Regulator whether a statement attributed to them by USS was something they were happy with. They replied that, no, on January 8, they had said that the statement was factually incorrect”.

Earlier this year, the Pensions Regulator chided USS bosses for misrepresenting its views in a consultation document.

The Financial Times reported the watchdog sent a private email to USS which said “incorrect” wording had been used to describe the regulator’s position on liabilities.

The USS document released in January said the watchdog favoured “measuring discount rates relative to gilts” but this statement was challenged by the Pensions Regulator. It said the USS had used this misrepresented opinion to defend its proposals to increase pension contributions.

Gilts refers to fixed-interest loan securities issued by the government. The £63bn scheme plan has a £3.6bn deficit which the USS is seeking to plug. The discount rates are used to value a pension scheme, its liabilities and, therefore, the scale of contributions required from employers and employees. If the discount rate is low, the scheme has higher liabilities to cover.

The increased pension contributions would affect 200,000 members of the scheme.

We have asked The Pensions Regulator and USS to keep stakeholders updated on this matter –UUK

In the same email, the regulator went on to say the discount rate applied in 2017 was not at the level the watchdog “views as appropriate”. The rate at the time was calculated as the value of gilts plus 1.2%.

The email was sent to USS head of funding, Jeff Rowney, chair of the USS trustee board, David Eastwood, and group chief executive Bill Galvin.

The evidence came to light after Hutton raised her concerns with the panel in March. The email was not disclosed to the board until May.

The University and College Union is currently drawing up strike action plans for the autumn if universities “do not rule out benefit cuts or contribution increases for members of the Universities Superannuation Scheme (USS)”.

A Universities UK spokesperson said: “Universities UK understands that investigations are being undertaken following the concerns raised by Professor Jane Hutton, a USS board director. Without the full details it is difficult to comment, and doing so publicly may prejudice the investigations taking place.

“We have asked The Pensions Regulator and USS to keep stakeholders updated on this matter.”

(Image credit: Flickr, Magnus Hagdorn)


Got a news story for UB? Contact James Higgins on 0117 300 5526


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