The joint agreement between UCU and UUK to restore benefits to the levels prior to the 2022 cuts is an important victory for members of UCU. It has taken 5 years of relentless industrial action since 2018 to force employers (represented by UUK) and the USS pension fund managers to agree to increase benefits ahead of cuts to contributions.
What has been achieved is the return of our benefits to 2022 levels with a restored accrual rate to the level it should have been taking into account inflation. The withdrawal of the threatened cap on inflation, which would have destroyed our pensions if it had remained. And, importantly, a payment of £215 p.a. for our pensions to cover most, if not all, of our losses over the two years from April 2022 to March 2024. It also ensures that the pension benefits placed in the Defined Contribution part of the scheme due to the reduction of the Defined Benefit threshold over those two years remain untouched for members.
The collapse of the fictitious gilt-based valuation methodology which created a £14.1b deficit and then remarkably a £7.4b surplus in just two years was the last straw for USS’s credibility in valuing our pension scheme. The only change was that interest rates have changed. We need to keep up the pressure on employers and USS to introduce changes to the valuation methodology, if we are to escape the vicious cycle of deficits and surpluses based on vagaries of the market. We also need to work towards governance changes in the scheme in order to ensure that the trustees are genuinely working in the interest of members and not for the benefit of the financial markets, or continuing to invest in fossil fuels.
The scheme was, is, and always should be capable of providing a guaranteed income for all of us when we retire. A defined benefit scheme with £73.1b of assets, open to new members and with a positive cashflow means that it should never need to touch its assets to pay pensions.
UCU Left members have continually argued that our pensions should be restored to levels before the cuts. Our “No Detriment” arguments were roundly criticised by those within the union who argued we were utopian, and lesser cuts or indeed pushing risk onto members through an alternative to a guaranteed pension, was all that could be achieved. Those who took a more pessimistic view, including our General Secretary and her supporters in the HEC, refused to raise the question of compensation for the losses (for the two years from April 2022 – March 2024) in negotiations, instead restricting themselves to only an investigation into augmentation.
A change of the elected UCU members of the SWG negotiating team to a majority of the left ensured that compensation was placed back on the table for negotiation. The current SWG group worked collectively and constructively, irrespectively of political perspectives, to build upon previous work of negotiators and, with UCU officials, ensured the deal now on the table was a marked improvement on earlier joint statements with UUK.
It is also clear that the continuing industrial action over pay and conditions pressured employers to settle one of the disputes. The Marking and Assessment Boycott in 2022 forced employers to commit to addressing benefit cuts and the more widespread MAB in 2023 ensured there could be no rowing back on those commitments. Without industrial action there would have been no pressure for employers to address benefit cuts.
Time for raising our heads
The continuing valuation methodology will, in all likelihood, create further surpluses in the scheme. However, these surpluses are just as fictitious as the deficits. They cannot be built-up or saved year-on-year. What they tell us is that members are currently paying more than necessary for the benefits they are to receive. Employers would like to cut contribution rates to the lowest possible levels, and in so doing take a contribution holiday leading to the wiping out of these notional surpluses. The employers’ own actuaries suggest a stable contribution rate of c.25% is necessary in the long run. The 20.6% contribution rate dangled by USS to employers’ risks introducing instability in the scheme in the medium term. Employers also are fully aware that they gain more from contribution reductions than members, whereas it is the opposite for improvements in benefits.
There is an alternative to pushing the scheme back into a notional deficit and that is, knowing there is a surplus, to increase benefits. Instead of looking to minimise cuts it is time to talk about what a better pension scheme could look like. Branches should bring motions to Congress 2024 on what a better guaranteed pension scheme could look like. We should ditch all talk of taking on the risk to the scheme through conditional indexation. Instead, we should look at pension inequalities, addressing climate change, a return to final salary fully DB scheme and much much more.
The offer to members doesn’t cover all of our losses in the two years of cuts but does ensure that the vast majority of members are back in a fully guaranteed pension scheme and the more risky Defined Contribution element of the scheme is more marginal than ever. It will be up to members to decide if this is enough.
Clouds on the Horizon. A word of warning
While it would be great to crow about our successes, this could be just one success in a longer battle over our rights to retire. Employers are seeking to replace their negotiating representatives in USS from UUK to the wider group UCEA, the body that negotiates over pay and conditions. They do so under the excuse that USS has over 340 member organisations that UCEA represent but UUK only represent the c.65 pre-92 institutions. That the pre-92 institutions make up over 90% of the contributions and liabilities in the scheme and the other 280 or so organisations have minimal membership of the scheme is ignored. No one should have any expectations that UCEA could be better than UUK given their appalling approach to the pay and conditions dispute. IN the JUNCHES talks over pay and conditions statements made in the talks were abruptly reversed one the talks ended. Passing pension responsibility to UCEA seems motivated by the fact that UUK can’t be trusted to fully abandon the defined benefit collective pension scheme!!!