On the go: The trustee of the Universities Superannuation Scheme has issued a series of consultation documents in a bid to commence agreements with employers on a suitable recovery plan and contribution rates for the scheme.
The trustee of USS on Tuesday issued formal consultation documents on a recovery plan to plug the pension scheme’s deficit, as assessed on March 31 2018, and to find a solution for a revised contribution schedule for the scheme, which would come into effect as of October 2019.
Alongside the consultation, the scheme published a letter revealing the Pensions Regulator’s position, saying it views the scheme covenant as “tending to strong” and that “although positive steps have been taken, the risks of disaggregation, and of increasing debt levels in institutions, have not gone away.”
The regulator said it was watching the scheme closely and that it would “expect any changes in the approach proposed for the 2020 Valuation to be consistent with legislative requirements and take account of the significant risks the scheme and employers face”.
All USS employers have until September 11 to respond to the trustee.
The consultation comes after an offer by Universities UK to raise employer contribution rates in exchange for a moratorium on strike action was rejected by the University and College Union last week.
The disagreement brings strike action back to the table in the higher education sector. UCU will go ahead with balloting its members, including university researchers, librarians and academic staff, from September 9.
It was strike action that saved the USS pension and the employers must surely have known that we would never accept a two-year ban on ballots
UCU spokesperson
UCU and the employers represented by UUK have been involved in protracted negotiations to decide how the cost of contributions increases required by the UK’s largest private sector retirement fund, worth £63bn, should be shared between employers and members.
According to UCU, the committee decided – through a casting vote by the independent chair – to conclude that increases would be shared 65:35 at a rate of 21.1 per cent of salary for employers and 9.6 per cent for members; which is in line with UUK’s original proposal.
UUK had offered further limited contribution increases of 0.5 per cent over two years, but set a condition that the union must not ballot for industrial action until October 2021.
Strike action back on table
A UUK spokesperson said: “It appears that UCU’s ‘no detriment’ position means no compromise.
“By rejecting the alternative offer proposed by employers, UCU has passed up an opportunity to conclude the valuation with a lower-member contribution rate, in line with what the Joint Expert Panel proposed, and 1.3 per cent lower than the rate that otherwise would have applied under the 2017 valuation backstop.”
USS dispute has exposed a transparency deficit
The USS dispute has sparked wider debate about the purpose of pensions regulation and raised uncomfortable questions for those involved in the broader demise of DB pensions in the private sector, comments Pensions Expert columnist Josephine Cumbo.
A UCU spokesperson said the offer was rejected because it had “ludicrous conditions attached about when and how the union could conduct strike ballots”.
The UCU spokesperson said: “It was strike action that saved the USS pension and the employers must surely have known that we would never accept a two-year ban on ballots.
“It is really disappointing that the employers are attempting to present the offer as a credible basis for negotiation.”
The union added that while there is “no plan for strike action in September… as things currently stand we will be moving to ballot our members at USS institutions for strike action; the ballot will open on 9th September and close on 30th October”.
