Get organised to defend USS and pay

Take the fight to Boris – Defend Higher Education!

What is at stake

This is what is happening to our USS Defined Benefit pension. If we were to accept UUK’s offer, USS will pay us a pension worth less, pound-for-pound, than three quarters of the value (72.22%) of the 2011 CARE scheme.

And that scheme was a huge cut from the Final Salary scheme that had existed for years.

Graph: The incredible shrinking USS CARE scheme. Pound for pound value of USS member contributions.

This is a deliberate policy by the employers, working in concert with those in USS and the City who would like to see the back of Defined Benefit. In 2018 UUK used their majority on the Board (and the casting vote of the Chair) to impose Defined Contribution.

The entire case for increasing contributions is predicated on a ‘deficit’ that has been widely debunked. The simple fact is that if the pension scheme were not ‘de-risked’ there would be no projected deficit. ‘De-risking’ (selling off investment assets and buying gilts) began after the employers demanded it in 2014.

This attack is not a one-off. It won’t be stopped by negotiations — however clever the negotiators. Sally Hunt knew that. That’s why in 2017, she used her influence on the HEC to build the strike. She silenced the right wing of the HEC, openly campaigned for strikes and allied with the Left to make sure they took place.

Members took up the call and responded brilliantly. 14 days of strikes stopped USS and UUK wrecking the Defined Benefit scheme altogether.

We could have fought and won to commit UUK to No Detriment. Had we done that, we would not have to fight now.

But two years on, USS and UUK are turning their backs on the Joint Expert Panel, the result of the 2018 dispute, ignoring UCU, and demanding 20% more from members — all for the same pension benefits.

With the employers imposing 1.8% on pay, USS members will have an effective 0.2% pay increase (CPI, meanwhile, is at 2% and RPI 2.8%). This is a huge pay cut. 

Worse, increased employer contributions will inevitably provoke the university employers. Trinity College Cambridge has left the scheme. As costs on them rise, universities will demand 100% DC. And every cut in DB pension value means less for members to defend.

We cannot leave it to the Joint Expert Panel to rescue us. USS is being undermined by market greed.

Record profits, winners and losers — staff and students lose

Our pension is the victim of Higher Education marketisation.

It is no accident that 2011 marks the beginning of the decline for USS, a scheme that survived stock market crashes and paid 1/80th Final Salary for decades. Before 2011 members paid 6.35% employer contributions. After UCU lost that round, contributions were forced up to 7.5%, and Final Salary was closed to new members.

Before 2011 the employers’ surpluses (profits) were small. Universities were not expected to turn a profit. For example, in 2003, HESA reported a sector surplus (both pre- and post- 92) of £65 million.

But by 2016 the sector surplus was £1.5 billion (on stricter reporting standards)!

The mad competitive scramble to recruit undergraduate students and bank £9,000+ tuition fees has set university against university, college against college. It has encouraged them to borrow over £10 billion in capital projects, and it has created winners and losers.

Graph: Winners and losers. Surpluses as a percentage of total income by institution (2016-17), HEFCE.

Graph: Winners and losers. Surpluses as a percentage of total income by institution (2016-17), HEFCE. Total surpluses in 2017 were reported to be £1.1 billion.

The premise of USS’s stability is mutuality — that the sector works together to provide pensions and the employers together contribute stability to the investment strategy by underwriting the portfolio. This is known as the ‘employer’s covenant’.

But Higher Education competition is destroying mutuality and trust. Why would UCL loan to USS to underwrite the risk of King’s, its competitor down the road? Why would King’s underwrite UCL?

Anyone who thinks that accepting this offer will ‘tide over’ USS has not been paying attention.

Members struck for 14 days in 2018 because they knew that our fight to defend USS was also a fight to defend the future of Higher Education. We had to resist the war of all against all that the sector had become locked into.

Made in Westminster

In 2016, HE Minister Jo Johnson drove through the Higher Education and Research Act. This allowed universities to declare bankruptcy, as Greenwich School of Management (aka ‘GSM London’) did in July.

No wonder employers are concerned about carrying each other’s risk!

The Tory Government is divided over Brexit. A snap General Election is likely. We have a tremendous opportunity to put Higher Education on the map and put the responsibility for this crisis back where it belongs — in Government. The demand for a Government Guarantee to underwrite USS makes total sense. But we need one now, not when USS is frittered away to nothing.

Since our strikes in HE, Further Education members struck over pay and marched on Parliament against cuts in funding. Our members’ action put FE on the political map and extracted £400 million from a right-wing government led by public school boys!

Taking action in own defence gives members confidence to stand shoulder to shoulder with our EU colleagues and students over Brexit, and stand up to any attempt to divide us in a snap election.

Get organised for Round 2

We have to fight to defend our pensions and pay, and we have to organise the fightback now.

As well as pay cuts, the other symptoms of HE marketisation are rising inequality, casualisation and workload.

We have a fantastic opportunity to bring all of these fights together in the two ballots, uniting both sectors.

Balloting begins next week.

The only way to defend our pensions is through strike action beginning in the Autumn Term. We need to approach Get the Vote Out with military seriousness in branch after branch.

We won the first battle, but if we don’t fight now, we will lose the war. We need to mobilise everyone who stood on the picket line in 2018 to organise meetings in department after department — it is time to unite to win the ballot to defend USS, defend pay and defend Higher Education for future generations.

Pay and Pensions: the fight of our lives

Defending Pay and Pensions – Report from HEC, 13 October

UCU Higher Education Committee met on 13th October. Two key issues occupied the main discussion: pay and the future of the USS pension scheme.

HEC voted formally to call a conference on the 9th November for all HE branches to discuss the future HE industrial strategy and to form the pay claim. The conference will include a meeting for pre-92 university branches to make decisions on the union’s campaign to defend the pension scheme in pre-92 universities, USS. Both meetings will accept motions.

Branches need to meet urgently to submit motions prior to the 25th October deadline.

In this report:

Pay

We need to ensure an industrial action strategy is developed which the union is prepared to properly back. Too often members see a union which does not campaign seriously for its demands, and offers a tokenistic reaction to employers offering below-inflation pay rises.

Following a series of on-off disputes, and last year’s below-inflation increase of 1.7%, our pay is continuing to decline in real terms. But we face new challenges. Intensified competition for undergraduate students following the HE Bill is creating upheaval in the English HE sector. Wales and Northern Ireland are suffering swingeing cuts, and the Scottish Parliament is expected to follow suit in December.

The Trade Union Act also makes winning national ballots more difficult. We have a choice: make the fight for pay part of a national political fight in defence of Higher Education or fight institution by institution against local managements limited by ‘affordability’, i.e. what they have left after spending on buildings, borrowing and Brexit contingency plans.

The “choice” between local and national disputes is a choice between accepting the parameters of austerity and breaking through. Across the public sector several unions are now rightly challenging the government’s 1% pay cap. We need to place our fight for pay in that context.

Gender and equality pay

The gender pay gap stands at an average of 12 percent across HE. It is particularly acute at senior levels. If we include casualised staff among female lecturers it can rise up to 50 percent. UCU has participated in the JNCHES working groups around gender pay and casualisation. While on gender this has have resulted in some recommendations, guidance and analysis overall there has been far too little action. 30 branches are now involved in gender pay audits. There was support for recognising the black and disabled pay gaps the latter being up to 30 percent. In the future, as a union we must plan to tackle pay gaps for all equality groups.

On casualisation (affecting 50 percent of teaching staff and at least 70 percent of research staff), again UCU has participated in JNCHES working groups but these have resulted in so little progress that UCU has withdrawn. This also leaves us in need of a clear strategy (including industrial action) to force employers to tackle these inequalities.

Bargaining guidance for branches campaigning and negotiating for casualised staff have been produced, although they are to be ratified by the hourly paid ratification panel before being published. Due to its importance in mobilising members the Anti Casualisation Committee voted to keep casualisation as a main theme of the UCU pay claim. This was ratified by the HEC.

A motion encouraging engagement, activism and participation in bargaining and negotiation for casualised lecturers was passed, making the most of alliances with the NUS and student unions, new free membership fees for students performing teaching, and the publicity of the anti casualisation roadshow. The slogan “break the pay cap, end the pay gap” can be our mobilising message.

Another important element of the pay claim discussed was workload. Pay is declining as a result of increased unpaid hours for full time and especially for fractional lecturers. In some post-92 universities the national contract provisions are at risk because hours are not provided for research and other ‘non FST’ activities.

This is a health and safety issue as well as a pay issue. Motions on these issues can be submitted for the special sector conference on 9th November (deadline is 26th May at 5pm).

Suggested motions for the HE Industrial Action Strategy Pay Conference

Break the cap: Close the gap

UCU notes

  1. the support our pay equality campaign had in mobilising members
  2. pay continues to decline in real terms and pay inequalities ensure those facing discrimination at work suffer more.

UCU resolves to

  1. demand a pay claim with a substantial level of both pay rise and catch up.
  2. launch a pay campaign with extensive public campaigning, stalls and meetings leading to an industrial action ballot for the beginning of 2018.
  3. centre our campaign material around slogans linking breaking the pay cap with closing the equality pay gap, including Break the cap: Close the gap.

(82 words)

National response to punitive deductions

UCU notes

  1. employers have resorted to punitive deductions for partial performance
  2. such punitive deductions undermine members support if the union does not escalate its national action to deter individual employers from taking such action.

UCU resolves

  1. in any industrial action ballot that explains the potential for punitive deductions to also explain the national action UCU will take if such actions occur.
  2. use escalating national strike action where individual employers threaten punitive deductions

(81 words)

USS Pensions

USS pensions formed the second major discussion for the meeting. The threat to our pension scheme was universally recognised by HEC delegates.

We are in the fight of our lives for the future of our pension scheme.

This is not just an issue for older members – indeed the biggest attack will fall on younger colleagues. This fight is about stopping the USS trustee unwinding the entire scheme and replace it with an individual stocks-and-shares saving scheme called “Defined Contribution”. Defined Contribution is a long-term gamble on the stock market, whose performance will tend to have inferior benefits when compared like-for-like with a collective-based Defined Benefit. Any stock market crash will hit employees’ future pensions, and potentially, pensioners.

The 9th November meeting will form a central focal point for elected branch delegates to decide what form the industrial action should take, and to take stock and build a massive campaign. It is crucially important that branches put forward motions and send delegates to the conference.

We think UCU needs to escalate the publicity and get the message out. We need to launch a high-profile campaign in defence of our pensions. Pensions are not separate from pay: they are deferred wages.

The ‘deficit’

UCU needs to take a clear stand on the ‘deficit’. Members are being barraged with propaganda from the USS itself, the supposedly-neutral government body the Pension Regulator and ‘independent pension analysts’. We need to counter that narrative.

The fact is that USS is not in deficit in any real sense, and additional contributions or cuts in benefits are unnecessary. The so-called ‘deficit’ is a projected deficit that only arises as a by-product of projecting forward on the premise that the scheme is wound up! Since this ‘winding-up investment model’ (called ‘de-risking’ under USS’s Test 1 methodology) involves selling higher-performing stocks and shares and buying expensive and low-performing bonds and gilts, it actually means moving the assets into the class of investments hit hardest by Quantitative Easing and Brexit and likely to increase very slowly in value, if at all. Far from reducing risk, it would be self-defeating.

UCU has challenged this valuation method but we need to explain the critique to members.

Working for UCU, First Actuarial have showed that USS is balancing its books. Income and expenditure is projected to match very closely for the foreseeable future. The entire scheme would pay for itself without a need to touch the assets. This means that there is no need to ‘de-risk’ now. Keeping the scheme as it is not only benefits members but is key to maintaining stability in the scheme. USS has gone from being a better scheme than TPS to being worse.

The pressure from the Pension Regulator to value the scheme in a ‘recklessly prudent’ manner arises from rules introduced by the then Blair Labour Government which, ironically, were supposed to protect private sector pensions. But a greedy private sector pension industry has used them to attack the terms of pension schemes, first closing Final Salary and then moving employees from Defined Benefit to Defined Contribution schemes. Many private sector workers have seen their pensions cut drastically.

We should not underestimate the role of past governments in introducing rules which have – far from protecting private pensions – undermined the basic employer pension. We should be demanding that the Corbyn-led Labour Party both critically examine whether these regulations have led to a perverse outcome and argue that the pension industry, like housing, should be regulated in the interests of the members of the scheme.

Building the campaign

UCU Left put forward a motion which was passed in an amended form, calling for a national high-profile campaign in defence of pensions. This needs to begin now. Simply dropping an industrial action ballot on members without a publicity campaign, as was done in the e-consultation, is a risky gamble. Moreover, members are reading stories in the FT and THE referring to the deficit as real or inevitable. Most of all, being bounced into a vote does not lead members to have confidence in UCU’s willingness to lead a campaign. Branches need to organise members meetings to debate the future of the USS now. In branches where this has taken place members are convinced of the need to take action to defend our pensions.

As with the e-consultation, which continues until Wednesday, the dispute will be declared formally against our employers, who are refusing to pay more into the scheme, meaning that either employees pay more or receive less. Some, like Southampton have come out publicly in favour of a fully individual DC scheme.

Our industrial action should be inspired by the methods of the successful strike currently underway at Leeds University, where three days of strike are combined with campaigning and debating with students. Members are involved at every level. Their ‘Striking Insights’ teach-outs have proved hugely popular in building the campaign for reclaiming the university.

If our pension campaign links with the campaign to abolish student fees and debt, alongside cutting VC’s pay and ending the marketization of HE, we can effectively resist the cuts to our pensions.

Pensions are our deferred wages. We need to campaign for pensions and campaign for a publicly funded and accountable higher education system.

Below are draft motions available for branches to put forward from their branches to the two conferences on pay and pensions on 9th November.

Suggested Motions to Special HE conference on USS 9th November

Campaigning alongside other disputes and campaigns

This conference believes

  1. Working with other unions in disputes and combining our campaigning alongside other unions in defence of pay, pensions and jobs strengthens our own USS campaign.
  2. Creating solidarity networks with students and community campaigns provides a further avenue for building solidarity.

This conference resolves

  1. Organise public pay and pensions rallies across the UK, stalls and public campaigns across the UK to campaign for pensions.
  2. Seek to involve UCU members in FE and PCS and CWU workers in our campaign and rallies. Similarly invite student unions and community campaigns to support our public events defence of pensions.
  3. Seek to organise, where possible, joint strike action alongside Further Education, PCS and CWU strikes.

(124 words)

Challenging the terms of debate

This conference believes that

  1. USS reports on the basis of its real assets: a surplus of £5bn.
  2. The reporting of a deficit is a recklessly prudent artificial construct ideologically driven by changes in accounting reporting regulation.
  3. Constructing deficits has provided an ideological justification for the privatisation of collective Defined Benefit pension schemes and movement into individual Defined Contribution pension schemes.

This conference resolves

  1. To reaffirm that UCU does not accept the methodology that creates the ‘gilts plus’ deficit.
  2. To state publicly in our literature we do not believe there to be a deficit and not to seek additional contributions from employers to pay for the constructed deficit.
  3. To refuse to accept detrimental changes to the USS pension scheme.

(129 words)