Employers call for UCU backing over USS governance review

On July 5, UUK announced a consultation into the structure, terms and scope of the review, seeking employers’ views on the matter.

Though UUK plans to initiate the review, it appealed for the UCU’s input in developing the approach and formulating recommendations. Relations between the two organisations are strained following a protracted battle over the USS 2020 valuation, which has seen UCU members walk out on strike.

The review was part of a package of measures agreed between UUK and the USS trustee, including pledges of covenant support and a moratorium on scheme exits, designed to provide the scheme with additional security and minimise contribution rate hikes.

In a letter announcing the consultation, UUK interim chief executive Chris Hale said the scheme’s trustee and governance structure had come under “enormous pressure” in recent times, “as funding difficulties have emerged and as changes to contributions and benefits have needed to be considered”. 

Though he believed the governance structures “have largely withstood all these challenges”, he nonetheless argued that “the complexities of the scheme have increased substantially in recent years, and the expectations of employers and members of those who are involved in the scheme and who make decisions have grown”.

Therefore, “a review of the governance structures at this time is entirely sensible and appropriate”, he argued. 

Hale stressed that the review should not be seen as a means by which to relitigate “the events of the past few years”, and should focus on the questions around governance structures.

“The aim of this consultation is to help us to set off in the right direction with the review, to involve all the key people, and to include the important matters within its scope,” he said.

The plan at present is for the review to be composed of three phases, with the first looking at the formal duties and responsibilities of the USS trustee and “other core powers”; the second looking at the scheme “in operation”, including key governance processes and issues of value and accountability; while the third phase would regard “the broader construct of the scheme” and how it governs the way benefits are derived and built up.

The consultation paper acknowledged, however, that these three phases would be broad, and require breaking down into a number of specific sections, looking, for instance, at the purpose of the trustee, the powers of the Joint Negotiating Committee, the effects of regulations and other external governance changes, and the role of USS Investment Management.

“We hope all parties will [...] engage constructively with any recommendations made by the review,” the paper stated.

“The group’s review will help to improve the scheme’s governance overall, build the understanding of the provisions (whether they actually prefer or support a particular formulation), increase the awareness of all parties of where the difficulties lie and the views that are held, and above all secure a more open and effective governance package and improve the perception among all employers and members of the scheme and the way it functions.”