On the go: The Universities Superannuation Scheme has said that a wide-ranging legal challenge recently brought to the High Court by university academics has “absolutely no merit”.
In a statement published online on Tuesday, the USS stated: “Nothing in the legal papers served on the trustee or otherwise justifies such a step, so we are comfortable that the challenge — whether in respect of the valuation, expenses or investment — has absolutely no merit.”
The statement added: “In the interests of USS members, the trustee will ask the High Court to refuse permission and thus avoid wasted costs for members and the scheme.”
It comes after Dr Neil Davies, senior research fellow at the Bristol Medical School, and Dr Ewan McGaughey, senior lecturer at King’s College London, issued legal proceedings against the USS directors, as well as against the scheme’s chief executive, Bill Galvin.
They argued that the USS directors acted in breach of their duties in conducting “a flawed valuation and predicting a so-called ‘deficit’ when there is now a multibillion surplus”, as well as proposed cuts that will disproportionately impact women, minorities and young people. They also accused the scheme of “super-inflating” operating costs “from £40.6m to £160m between 2008 and 2020”.
Although the USS has now acknowledged that not all of its members “agree with the valuation decisions” taken by the scheme, it stated that “decisions have been made balancing the interests of all USS members after extensive debate and with the benefit of appropriate expert advice”.
The statement also recognised that discussions at the Joint Negotiating Committee have been “difficult”.
“Our primary legal duty as trustee is to protect the benefits promised to USS members,” the statement added.
The USS said that analysis of the cost of providing a “set, inflation-protected income for life” is much more expensive than in the past, and is “true for USS as it is for other defined benefit pension schemes”.
“The JNC’s proposals respond to the challenges presented by long-term economic and demographic trends by slowing the pace at which USS pension promises build up in future,” it stated.
“Its proposals put the scheme on a more sustainable footing for the long term, and secure the future of this rare and valuable scheme in a way that is affordable to members and employers.”
In a separate potential legal challenge, the University and College Union’s general secretary has written to the USS’s chief executive outlining the potential for legal action against the scheme’s trustees and has called for a pause in the 2020 valuation process.
In a letter to Galvin, the UCU’s Dr Jo Grady stated that the USS may have breached its own scheme rules in a way that has affected the ability of employers and members to “negotiate an acceptable outcome”.
