Criticisms put forward by striking university staff towards the controversial settlement made between the University and College Union (UCU) and Universities UK (UUK) in March, have been grounded by a Joint Expert Panel (JEP) who were tasked with reviewing the 2017 valuation of the Universities Superannuation Scheme (USS).
Many key issues have been pointed out by the Panel, primarily with a controversial deficit valuation which was a key factor for the industrial action of the last academic year, as it justified pension reforms to the USS which would have seen a typical lecturer lose up to £10,000 of their pension every year.
UUK intended to change the Superannuation Scheme from a defined benefits scheme to what they called a “market-leading” defined contributions scheme. This would have meant that the state of the market would impact the amount an employee receives when they retire.
This led staff at 65 universities across the UK to strike, which was the biggest display of workers undertaking industrial action in the Higher Education sector’s history. It is estimated that over one million students were affected, and that at least 575,000 hours of teaching time were lost.
In the most recent development, the Joint Expert Panel – put together by both the UCU and UUK – have published a report (released on Friday 13 September) which stated that the “framing and context” of questions asked to university employers as part of the consultation on the 2017 USS valuation produced “misleading results”.
The report was part of an agreement between the UCU and UUK to end industrial action in March. UEA’s UCU branch rejected this offer at the time, as staff were disappointed with the agreement’s address of a contested deficit in the pension scheme.
Speaking then Dr. Ben Little, UEA’s UCU branch spokesperson, said: “The basic problem has been acknowledged, that the valuation of the pension scheme is inadequate and needs to be re-done.
“We would effectively be taking a cut on bad maths. It’s a reduced pension with increased contributions on the basis of bad maths, people are really unhappy about that.”
The report also claimed that factors of the USS valuation led to “dampened perceptions” of how the national pensions scheme was viewed. Another major issue with the valuation was the attempt to quantify survey responses, when many of the responses were subjective, the Panel says.
Professor Richard Farndale, Pensions Officer of Cambridge University’s UCU branch, has said that he is “delighted to see that UCU’s strike action is now fully vindicated.”
The report went on to recommend four key areas where adjustments to the 2017 valuation should be considered. Firstly, the Panel suggested that there should be a re-evaluation of the employers’ attitude to risk, “which would result in a re-evaluation of the reliance on the sponsor covenant.”
This would help to increase faith in the “strength and diversity” of Higher Education, and reduce the “strong risk aversion” which the 2017 valuation placed on USS.
The Panel added that the valuation needs to adopt a greater consistency of approach from the 2014 and 2017 valuations of USS, which affects the scale and timing of deficit recovery contributions. Furthermore, the valuation must ensure fairness and equality between generations of scheme members by smoothing future service contributions.
Finally, the report wished to ensure that the valuation always uses the most recently available data, particularly when it comes to market improvements, investment considerations and the latest data on mortality.
According to the Panel, these four adjustments could mean a total required contribution of 29.2 percent to fund current benefits. This compares with the current rate of 26 percent and the projected rate of 36.6 percent for April 2020 (proposed by USS based on the current valuation).
Joanne Segars, Chief of the JEP, said: “We believe that our constructive and practical proposals for adjustments to the valuation can be implemented quickly and act as the cornerstone for a negotiated settlement.”
If UUK do not implement these adjustments, then further industrial action may be a consideration for the UCU. However, UUK have so far seemed receptive to the report.
In a press release, a UCU spokesperson said: “We welcome the JEP’s proposal that the valuation should be adjusted and are also encouraged that the Panel now wishes to look in detail at alternative methods for future valuations.”
However, the USS have made it clear that “unless and until an alternative has been agreed, consulted upon and implemented, cost sharing remains the default process for addressing the regulatory and legal obligations of the 2017 evaluation.”
UEA’s Chief Resource Officer, Ian Callaghan, told Concrete that the University “look forward to working with all the parties concerned to move forward towards a resolution.”
Martin Marko, the Postgraduate Education Officer at UEASU, expressed the Union’s support for the report’s findings. “Some of the key findings reported by the JEP contextualises why unsatisfactory proposals have been put forward,” he said.
“If the processes and practices are producing misleading results, it is no surprise that members have been presented with such a poor deal. [UEASU] hope that all parties involved can now come to an agreement that is fair, well-thought out and future-proofed to ensure that members, including our own Associate Tutors, get a fair deal where they can feel secure in their jobs, concentrate on the important work that they do and prevent further disruption on campus.”
UEA’s UCU branch were contacted for comment.