On the go: A lawsuit against Universities Superannuation Scheme directors over their handling of the scheme’s 2020 valuation is to proceed, after the High Court ruled against attempts to deny the legal action.
Two lecturers, backed by a number of University and College Union branches, filed a wide-ranging legal action against USS directors in November last year, accusing them of multiple failings with respect to the controversial 2020 valuation.
Dr Neil Davies, senior research fellow at Bristol Medical School, and Dr Ewan McGaughey, senior lecturer at King’s College London, argued that USS directors had acted in breach of their duties in conducting “a flawed valuation and predicting a so-called ‘deficit’, when there is now a multi-billion surplus”.
They also alleged that the planned programme of cuts resulting from the 2020 valuation, which saw the scheme’s deficit quadruple to more than £14bn, disproportionately impacted women, minorities and young people.
The USS trustee agreed a deal with employer group Universities UK in early February to stave off “ruinous” rate hikes, though the deal was rejected by the UCU, which says it entails benefit cuts of as much as 35 per cent for a “typical lecturer”.
UUK disputes this figure. UCU members have been involved in several rounds of strike action, with further walkouts threatened in response to the deal between employers and the scheme’s trustee.
The USS rejected the grounds for McGaughey and Davies’ legal action in November, arguing that the case had “absolutely no merit”.
It asked the High Court to reject the action, but on February 28 the court turned down this request, setting aside a previous court order and allowing the case to proceed.
Speaking after the ruling, McGaughey cautioned that “this was only the first step” — the court ruling on technical aspects. Its verdict allows the claim to move to the next stage, which will determine whether any of the plaintiffs’ four claims have merits.
“The first is that the directors have abused their powers in carrying out a valuation that says, even though there’s £30bn in assets… that they say there is a deficit on the assumption there is zero per cent growth [in assets for 30 years above consumer price index inflation],” he explained.
“The second [claim] is that there has been a massive cost inflation. In 2007 they spent £38mn administering the pension, now it’s £160mn. They should be able to operate an efficient pensions service.
“The third thing is that the discriminatory cuts have a disproportionate impact on women, on young people, on black and ethnic minorities.”
McGaughey and Davies have also accused USS directors of inaction on climate change, which forms part of their legal claim.
The next court hearing is scheduled for March 21, where the USS will have an opportunity to present its case.
The USS has previously declined to comment on ongoing legal proceedings.
