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Universities UK, which represents employers in the long-running pensions dispute with academics, has written a biting response to new proposals made by the University and College Union demanding a 2022 valuation. The exchange comes as most universities are expected to see pension strikes in February following an earlier ballot by UCU.
UCU members are expected to go on strike over pensions for up to 7 days at all 68 universities, with further strike days linked to separate pay disputes, after employers said they would reform the Universities Superannuation Scheme so that benefits build up more slowly because of affordability issues.
UCU however maintains that a recent valuation of USS was "flawed" because it was carried out at the start of the pandemic, when global markets fell.
General secretary Jo Grady recently wrote to the chair of the Joint Negotiating Committee, Judith Fish of Dalriada Trustees, proposing the scheme should conduct “a moderately prudent, evidence-based" valuation this year to avert the planned strikes, pointing to an increase in pension assets to £92bn at USS. The union said it is meeting with UUK on 11 February.
Apart from a new valuation, the union demands that employers agree to provide the same level of covenant support as for their own proposals to facilitate a cost-sharing of current benefits at 11% member and 23.7% employer until 1 October 2022, and 11.8%/25.2% thereafter; and that employers agree to pay a maximum 25.2% and members a maximum of 9.8% from 1 April 2023 or “the best achievable as a result of the call on USS to issue a moderately prudent, evidence-based valuation”.
Grady said the proposals were a way out of the imminent disruption at UK universities, and should be formally tabled at the Joint Negotiating Committee as soon as possible.
UUK: Explain meaning of ‘moderately prudent’
However, Alistair Jarvis, chief executive of UUK, responded with a highly critical letter on Monday, noting that it is in the trustees’ power, in line with regulations, to decide when to conduct a valuation, and “not just a matter of making a request to the USS Trustee based on a perception of more favourable funding conditions”.
Jarvis added: “We would like to hear you explain your references to ‘moderately prudent’ and ‘evidence-based’, and also make clear what information you have which would credibly suggest that there is a coherent case under pensions law and regulation for the USS Trustee to undertake a valuation as at March 2022?”
The proposal “places huge weight on a hypothetical 2022 valuation which, even if lawful and justified, could not be assumed to deliver a materially better financial position for the scheme”, he added. Conducting another valuation, he argued, would “serve little purpose other than to delay the reforms the scheme urgently needs”, while worsening its funding position in the meantime and creating additional cost.
Jarvis also criticised the contribution rates proposed by UCU as unaffordable for both employers and employees, arguing that they could lead to job cuts, impact research and push lower paid staff out of the scheme.
“I would strongly urge you to reconsider the proposal you would wish to bring to the JNC for consideration,” Jarvis said, but added that if the JNC validates the UCU’s proposal as implementable, UUK would formally consult employers on it.
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