Union action 2018

Background

The USS is open to staff on grades 7-10 and Associate Tutors. Staff who are on grades 1-6 are covered by other pension arrangements.

USS is one of the largest private pension schemes in the UK and is the principal scheme for academic and comparable staff in UK universities and other higher education and research institutions.

Every three years there is a valuation of USS to ensure it has sufficient funds to pay the pensions already earned, and that future contributions into the scheme will cover the cost of anticipated payments for pensions and other benefits, such as ill-health, when due.

The latest valuation, which took place on 31 March 2017, showed an increase in the funding deficit to £7.5 billion and the independent Pensions Regulator expressed its concerns over the future of the scheme.

The USS trustees are required to sign off the valuation and submit a report and recovery plan to the Pensions Regulator within 15 months of the valuation date (i.e. by 30 June 2018). 

What happened before the industrial action

Universities UK (UUK, representing universities including Sussex) and UCU (on behalf of employees) have met more than 30 times to discuss possible solutions to the outcome of the 2017 valuation. This engagement was through the Joint Negotiating Committee (JNC) - on which UUK and the UCU are equally represented - as well as other formal and informal meetings.

The JNC is responsible for making a decision about how the scheme should be structured in future, often referred to as ‘pension reform’. The JNC has an independent chair who oversees discussions between employer and employee representatives and can choose to cast a deciding vote if necessary.

A decision on pension reform was due by 18 December 2017 in order to meet statutory requirements but, on 19 December, the decision was deferred until 23 January 2018.

Two proposals were considered at the meeting:

  • UCU’s proposal, as tabled in December 2017, which offered some changes to benefits and raised employer and USS member contributions, and
  • UUK’s proposal, a revised version of its proposal from November 2017, which had been modified during subsequent negotiations.

The JNC meeting on 23 January voted in favour of the UUK proposal, via exercise of the independent chair’s casting vote.

UCU members then voted in favour of strike action, which began in February.

On 22 February 2018, UUK published an open letter to USS members.

What happened during the industrial action

After six days of negotiations, an agreement was reached on 12 March between Universities UK (UUK) and UCU on proposals under the auspices of Acas.

These proposals were rejected by UCU's Higher Education Committee on 13 March after UCU had consulted its branches. As a result the scheduled meeting of the Joint Negotiating Committee scheduled for 14 March did not go ahead and the decision of the JNC in January still stands.

Following further negotiations, UUK came back with its latest proposal: the creation of a jointly agreed expert panel to agree key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund.

UCU decided to put this proposal to its members; the ballot opened on Wednesday 4 April and closed on 13 April.

What happened after the industrial action

Following the 13 April UCU ballot result, when union members voted to accept the employers' USS proposals, UUK and UCU agreed to appoint a Joint Expert Panel (JEP) to consider the methodology and assumptions underpinning the 31 March 2017 USS valuation. 

In May 2018, the terms of the reference for the Panel and the appointment of its independent chair, Joanne Segars, were announced. UCU and UUK each nominated three representatives to be panel members. The panel convened its first meeting in late May and will continue to meet regularly over summer 2018. Updates on the work of the Joint Expert Panel will be published following panel meetings.  

The view of the USS trustee is that the only reasonable course of action open is to continue to pursue the completion of the 2017 valuation in compliance with pensions legislation and the trust deed and rules of USS, and for this to occur in parallel with the proposed review.

The 23 January JNC resolution

The Joint Negotiating Committee (JNC), which compromises equal numbers of nominees from UUK and UCU and is chaired by Sir Andrew Cubie, met on Friday 27 April and formally agreed that the resolution on USS benefits agreed at the JNC meeting of 23 January agreement would not be continued. This means that there is currently no formal plan – as required in law – to reduce the USS deficit.

Article 76.4

The USS Board met on Tuesday 1 May and announced that, because there is currently no agreed deficit recovery plan in place, Article 76.4 of the scheme rules will be triggered. The USS trustee has a legal duty to do this and, because they cannot change the benefit structure, universities and individual members will have to pay substantially higher contributions. These are likely to be 8% for universities and 4% for members. 

This decision was driven by the preference of the USS trustee for the 2017 valuation to progress within the scheme rules and the law, and the stated expectation of the Pensions Regulator (TPR) that the trustee sets out a credible programme to complete the 2017 valuation in a reasonable time frame.

Valuation process and methodology

Detail, information and explanatory videos about the 31 March 2017 valuation are available at www.uss.co.uk/valuation.

What happens next

Subject to the terms of reference for the proposed review, the USS trustee is committed to engaging constructively with the stakeholder investigations associated with this review.

The Joint Expert Panel (JEP) is expected to publish a report on the 2017 valuation in late September 2018. UCU and UUK will then need to work together to consider the report’s findings and agree an appropriate solution for the 2017 valuation. The JEP will not commission a full revaluation of the fund. 

The likelihood is that nothing will change until April 2019 and this will allow the Joint Expert Panel to conclude their work and inform discussions with USS and, if necessary, the Pensions Regulator.

USS have made it clear to UCU and UUK that the proposal on the JEP must involve timescales consistent with the timelines for the USS trustee to make any required changes from 1 April 2019.

National consultation

Employers have a statutory obligation to hold a meaningful consultation with all USS members on the possible impact of pension changes on individuals.

Consultation with USS members on the 23 January JNC decision, which was scheduled to start on 19 March, is currently suspended. 

Implementation of any changes

Any changes to benefits would apply only to ‘future benefits’ i.e. they would only affect pensions earned after a future implementation date (suggested to be 1 April 2019).

No changes would be made to the pension that USS members have already earned retrospectively; members’ benefits that have been built up to date and before any contribution/benefit changes are implemented are protected by law.

 

Further information

The University is committed to making information available to students, and we will update this page as matters develop.

Further information can be found online via the following links to the USS, UUK and UCU websites.

Universities Superannuation Scheme (USS)

Universities UK (UUK)

University and College Union (UCU)

 

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