Following Professor Charlie Jeffery’s email to staff (13 Nov), UCU Edinburgh has through the Joint Unions Liaison Committee (JULC) requested answers to the following questions via the Combined Joint Consultative and Negotiating Committee (CJCNC).
Our first set of questions arise from the email; these are followed by three supplementary questions. The italicised statements below are all taken from Professor Jeffery’s email, we would like answers to the ensuing questions.
“We, along with all other Universities that offer USS, were asked to respond to a number of questions on the USS Technical Assumptions, the method used to value the pension scheme.”
Can JULC have a copy of the University’s response to the USS Technical Assumptions, preferably ahead of our meeting (on the understanding that this would be kept confidential)?
“Our response was considered and agreed by a special Sub Committee of Court. “
JULC would like to know the following:
1) What was the membership of the sub-committee?
2) Has the full Court seen the response? Does it agree with it?
3) Has CMG seen the response? Does it agree with it?
4) Can we see the minutes of any meetings this sub-committee had?
“We said that we wanted the outcome to be something that is seen by staff to be fair and in their best interests.”
Does University management believe the current UUK proposal is fair and in the best interests of staff?
If not, what steps have or will be taken to stress to UUK that their proposal does not meet this University’s criteria as communicated to staff?
“We confirmed that we would be willing to maintain the current level of employer contribution at 18%.
We also said that we were willing to consider alternative proposals for the amount of contribution if it would secure the long-term sustainability of the scheme.”
What consideration was given to increasing employer contributions in the line with the recommendations of the Trustees and why was this option rejected?
Do you acknowledge that the current proposal, while keeping the employers’ contribution at 18% results in an actual reduction in the amount going into fund future staff pensions from the employers as a higher amount is set aside for past deficit reduction, administration and costs? Is the implication that you would be prepared to pay more than 18%?
“We emphasised the importance of future pension arrangements being sustainable; attractive; valued; flexible; predictable and stable.
We believe the current UUK proposal is none of these and especially it is not predictable, since Individual Defined Contribution schemes offer no guarantees. Again, what message will you send to UUK regarding their failure to meet your criteria?
“We recognised that there will be expectations from staff to maintain a defined benefit structure for USS.”
Is the University committed in any way to supporting the expectations of staff?
” However, we expressed concern that changes to the threshold for defined benefit or a reduction in the accrual rate would be unlikely to solve the structural problem associated with USS, given the continuing issues around sustainability.”
Do you recognise that any ‘structural problem’ with USS results purely from a ‘recklessly prudent’ approach to the valuation methodology? The fund takes in more than it pays out and on a best estimate valuation has an £8 billion surplus.
“We expressed particular concern about the impact of an unsustainable scheme on our staff, as well as on our institution. ”
Why do you think the scheme is unsustainable, given that it brings in more than it pays out, is a last man standing scheme, backed by the employers’ covenant and ultimately the PPF?
Are you backing out of your covenant commitments? If senior managements elsewhere are not committed to the covenant, what will you do to convince them to keep their promises?
“We recognised that maintaining the current structure would not address the recent trend of increasing deficits in the scheme (caused by liabilities growing faster than assets).”
Again, do you recognise that the idea of liabilities growing faster than assets is
only true of the notional valuation and not of the actual performance of the Scheme as it is currently invested? If you do, then how can you communicate this to staff?
“This trend is driven by factors substantially out with our control or that of the Trustees. This could mean that the scheme might require regular review and possible further amendment. We were concerned that constant revisions to the scheme benefits and structure might lead to mistrust and a lack of confidence in the scheme from the membership!”
Do you realise that any lack of confidence in the scheme seems to rest solely with the pensions regulator, based on their lack of trust in the employers fulfilling their covenant?
Early discussion seemed to indicate that a majority of employers favoured some form of Defined Benefit.
What evidence do you have that the UUK negotiators are reflecting the majority position of employers, given e.g. the statement by the VC of Warwick that he is mystified by the proposals?
“We therefore stated that we thought it important to agree changes that would provide stability for the longer term. We proposed that detailed work should be done to develop options, including for a good quality, robust defined contribution scheme.
This work should clearly draw out the implications for employees of any move from a defined benefit to a defined contribution scheme, including the greater flexibility to access pension benefits in defined contribution schemes, resulting from recent changes in the law.
We were very clear in our response that we want to incentivise savings for retirement and do NOT want any changes to lead to any reduction in employers’ payment towards pension provision. “
Again, do you acknowledge that keeping the employers’ contribution at 18% does result in a reduction of the amount being invested in future pension provision?
“We want the outcome to be a pension package that offers a high degree of certainty and is valued and supported by staff.”
Given that the current proposal by UUK offers near zero certainty of anything, will you put to them that they need to come up with something better?
“We also recognised that this is an extremely complex area and suggested that robust yet simple models should be developed as the discussions progress so that staff can see clearly the implications of the final proposals. “
Can we assume from this that you have so far seen no calculations as to what staff expectations might be? Can you please insist on this immediately?
- Would you support an alternative to Individual Defined Contribution (IDC)such as Collective Defined Contribution (CDC) or a Wage in Retirement scheme (WinRS)?
- If the UUK proposals for IDC go ahead would you support opening to staff better alternatives to USS such as TPS?
- After a decade of reductions in benefits for increases in contributions, staff no longer trust USS. Similarly, given their reluctant acquiescence to such changes, employers no longer trust USS. If the UUK proposals go ahead would you agree to providing the same increases in salary in lieu of employer and employee pensions contributions, for staff wishing to quit USS, which you give to staff who have reached the Lifetime Allowance for pensions?