The USS: fact and fiction

January 22, 2015

We write as representatives of the Left on the Higher Education Committee and other University and College Union activists who are utterly opposed to any retreat from defending members’ pensions. We have carried out a careful critical analysis of the different proposals and are calling on members to reject the current Universities Superannuation Scheme offer that will lead to cuts of up to 20 per cent.

We believe that the UCU is consulting members over accepting a retreat that will mean all our members pay more. Those in the final salary scheme (three-quarters of active USS membership) will have their pensions cut, and a great number of staff will be placed in the position where they cannot afford to retire.

Our assessment is that the trade-off of an increase of 1.5 per cent in employee contributions for a 6 per cent benefit improvement is projected to be broadly cost-neutral to the USS and the employers. The Universities UK proposal, which may be enacted if members vote No, has now been changed to have the same defined contribution cap at £55,000, so the only difference between the UCU and the UUK proposals is whether USS members would wish to invest more in the career revalued benefits scheme.

Given a real choice, members in the CRB scheme say they would not want to pay more. They want a better scheme with better value for money, such as the current final salary scheme. Once inflation, the preference for money now rather than in the future, the fact that many CRB members will pay increased contributions for more years than they will receive in pensions, and the likelihood of further reductions in the future are taken into account, a 1.5 per cent increase in contributions now will outweigh the projected 6 per cent increase at some point in the future, and may make the scheme unaffordable for many low-paid members.

The second problem with both proposals is the introduction of a new defined contribution section with lower levels of employer investment (12 per cent instead of 18 per cent) and poorer projected benefits, which will be applied to all salaries of more than £55,000 (with this amount updated at most in relation to the consumer price index). If pay rises increase above CPI as they have in the past, then over time more staff will be drawn into this part of the scheme.

We can still win, but to win we need to be prepared to take hard-hitting industrial action. We call for members to vote against the proposals in the e-ballot and to pass motions through branches calling for rejection of the offer, to support industrial action and to call a special higher education sector conference to determine our strategy to win this crucial dispute.

Marion Hersh
NEC member and USS national negotiator, University of Glasgow

Sean Wallis
NEC member, University College London

Ioanna Ioannou
NEC member, University College London

Professor Andreas Bieler
NEC member, University of Nottingham

Lesley McGorrigan
NEC member, University of Leeds

Karen Evans
NEC member, University of Liverpool

Lesley Kane
NEC member, The Open University

Jo McNeill
NEC member, University of Liverpool

Saira Weiner
NEC member, Liverpool John Moores University (post-92)

Sue Abbott
NEC member, Northumbria University (post-92)

Patricia McManus
NEC member, University of Brighton (post-92)

Professor Paul Blackledge
NEC member, Leeds Beckett University (post-92)

Professor Dennis Leech
UCU president, University of Warwick

Saladin Meckled-Garcia
UCU vice-president, University College London

Marian Mayer
UCU chair, Bournemouth University

Rick Saull
UCU branch secretary, Queen Mary University of London

Caoimhe Mader McGuinness
UCU anti-casualisation rep, Queen Mary University of London

Prof Craig Brandist
UCU president, University of Sheffield

Julie Hearn
UCU membership officer, University of Lancaster

Professor Steven French
UCU executive member, University of Leeds

Andy Stafford
UCU rep, University of Leeds

Gail Day
UCU rep, University of Leeds

Johnny Darlington
UCU branch secretary, Soas, University of London

James Eastwood
UCU GTA representative, Soas, University of London

Andrew Kennedy
UCU executive member, Soas, University of London

Rachel Cohen
UCU executive member, City University London

Nalini Vittal
UCU executive member, University College London

Martin Fry
UCU executive member, University College London

Matthew Beaumont
UCU rep, University College London

Bernie Maguire
UCU president, University of Salford

Helen Franks
UCU branch secretary, University of Salford

Christine Sheehy
UCU northwest regional chair, University of Salford

Glyn Heath
UCU northwest regional treasurer, University of Salford

Eleni Michalopoulou
UCU vice-president, University of Liverpool

Mark O’Brien
UCU membership secretary, University of Liverpool

Pam Clarke
UCU executive member, University of Liverpool

David Stewart
UCU executive member, University of Liverpool

Alex Lancaster
UCU equality officer, University of Liverpool

Professor Des Freedman
UCU branch secretary, Goldsmiths, University London

Carlo Morelli
UCU vice-president, University of Dundee

Peter Woodward
UCU executive member, Imperial College London

Roddy Slorach
UCU equality officer, Imperial College London

Steve Roskams
UCU rep, University of York

Mike Arrowsmith
UCU membership officer, University of St Andrews

Jim Wolfreys
UCU president, King’s College London

Andy Scally
UCU executive member, University of Bradford

Helen MacCarthy
UCU branch secretary, University of Hull

Hedley Bashforth
UCU branch secretary, University of Bath

Jonathan Charley
UCU president, University of Strathclyde

Geoff Abbott
Newcastle University

Sara Maioli
Newcastle University

Professor Malcolm Povey
University of Leeds

Professor Raymond Bush
University of Leeds

Professor Catherine E. Karkov
University of Leeds

Nick Thurston
University of Leeds

Professor Alex Callinicos
King’s College London

Professor David Treece
King’s College London

Professor Susanne Kord
University College London

Gabriel Moshenska
University College London

Rory Fitzgerald
City University London

Lee Jones
Queen Mary University of London

Elmy Thompson
Imperial College London

Ciara Kierans
University of Liverpool

Feyzi Ismail
Soas, University of London

Paul O’Connell
Soas, University of London

Chris Gutkind
Soas, University of London

Mark Laffey
Soas, University of London

Kristin Surak
Soas, University of London

Thomas Marois
Soas, University of London

Fujiko Kobayashi
Soas, University of London

Seán Doyle
UCL Institute of Education

Anne Alexander
University of Cambridge

Professor Richard Farndale
University of Cambridge

Peter Dwyer
Ruskin College, University of Oxford

John G Walker
Ruskin College, University of Oxford

Professor James Newell
University of Salford

Professor Allison Drew
University of York

Daragh O’Reilly
University of Sheffield

Celia Hollingworth
University of Bristol

Andy Coles
University of Manchester

Wendy Olsen
University of Manchester

John Costello
University of Manchester

Davidson Chademana
University of Dundee

Gerry Mooney
The Open University

Prof Suman Gupta
The Open University

Prof Steve Edwards
The Open University

Bruce Heil
The Open University

Alison Higgs
The Open University

Anne Martin
The Open University

Paula James
The Open University

Chris A. Williams
The Open University

Paul Brook
University of Leicester

Xanthe Whittaker
University of Leicester

John Parrington
University of Oxford

Kathryn Cruz
Keele University

Fabienne Emmerich
Keele University

Bahadur Najak
University of Durham

Matteo Mandarini
Queen Mary University of London

Cliff Snaith
UCU London region secretary, London Metropolitan University (post-92)

Mark Campbell
UCU chair, London Metropolitan University (post-92)

David Hardman
UCU membership officer, London Metropolitan University (post-92)

Richard Payne
UCU executive member, London Metropolitan University (post-92)

Steve Mardy
UCU chair (city campus), Leeds Beckett University (post-92)

Mark Abel
Chair UCU coordinating committee, University of Brighton (post-92)

Professor Tom Hickey
University of Brighton (post-92)

Professor Raphael Salkie
University of Brighton (post-92)

Robin Dunford
University of Brighton (post-92)

Jenny Robertson
University of Brighton (post-92)

Nicolas Van Labeke
Glasgow School of Art (post-92; a 13-year USS member unable to vote)

Jon Berry
University of Hertfordshire (post-92)

Professor Jonathan Davies
De Montford University (post-92)

Sean Vernell
UCU coordinating committee secretary, City and Islington College (FE)

 

The USS dispute is primarily about ideas, not money. The size of the deficit depends on what is assumed about the future of higher education, specifically the pre-92 sector.

It has been shown in the employers’ responses to the UUK consultation (including the London School of Economics, Imperial College London, and the universities of Warwick, Cambridge, Essex, Aberdeen and Oxford), and also a letter from a group of leading actuarial scientists to the trustees, that the deficit is only as large as the trustees claim because they are making assumptions that are too pessimistic.

More significantly, a report by First Actuarial for the UCU has shown that the key assumption is about the future of higher education itself. The report revealed that if the sector is assumed to have an indefinite existence such that the USS has a continuous basis (rather than the limited period of 15 to 20 years secure lifetime assumed by the trustees) then the deficit could well turn out to be negligible.

The deficit is therefore ideological in essence. The trustees have a definite ideology and are manipulating the deficit accordingly. They have assumed too high salary growth, too much inflation, very low interest rates that will continue indefinitely, and have overestimated increases in longevity. If there is a pessimistic assumption that can be made, the trustees have made it. By making appropriate assumptions about future trends there is enormous scope to find a deficit, if that is what you are looking for. Or not.

This raises the question: what has changed since 2011 when the recovery programme was implemented?

The big change is that the government has withdrawn. The USS originally had a trustee representative of the funding councils, alongside those representing UUK, UCU and independents. When the scheme was set up the assumption was that the government via the Higher Education Funding Council for England would act as guarantor. And it was at that time axiomatic that the universities would continue to exist indefinitely. The government seat was abolished by the coalition, presumably as part of the marketisation madness of David Willetts; and that far-reaching constitutional change was made with a minimum of fuss, its announcement buried away in the 2012 report and accounts as a fait accompli.

So the USS now find itself as a pension scheme for a group of institutions operating in a market, the nature of which they know nothing about, and this uncertainty is the source of the deficit figures, which are a result of the government’s marketisation obsession.

Dennis Leech
Emeritus professor of economics
University of Warwick

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