UCU calls for an end to USS cuts in light of improved finances

UCU has been battling with employer group Universities UK over the scheme’s 2020 valuation, which showed its deficit quadrupling to more than £14bn.

The USS trustee laid out a new contribution schedule demanding drastic hikes in both member and employer contributions, which UUK sought to stave off by pledging a moratorium on scheme exits and greater covenant support.

UCU members subsequently undertook several rounds of strike action, the union claiming that the employers’ deal amounted to benefit cuts of 35 per cent for  a “typical lecture”, a figure UUK disputes.

The union accused employers of refusing to consider its own alternative solution to the valuation wrangle, plans it has now resubmitted after the USS trustee published a report on scheme finances on March 31. 

The report suggests assets have more than recovered to their pre-pandemic levels, now standing at more than £88bn. Moreover, growth has now outstripped liabilities, and the level of contributions required to service the deficit has now fallen to zero per cent.

In a letter to UUK chief executive Alistair Jarvis, UCU general secretary Jo Grady argued the improved financial situation demands that employers reverse the planned cuts, due to come into force from April 1.

UCU, which has long demanded a new valuation — arguing that the 2020 valuation was skewed because it took place during the worst period for markets of the Covid-19 pandemic — said a valuation taking place today would show the deficit falling by more than 85 per cent.

In her letter, Grady wrote: “It is now an untenable position for UUK to still be encouraging institutions to pay out for a deficit that does not exist — and to be asking members to take significant cuts to their retirement incomes.”

She added that the trustees’ financial report suggests a valuation held as at March 31 could in fact see contribution rates lowered further and benefits increased.

She called on UUK to revoke its plans and support UCU’s preferred solution. This would include a new valuation, a short-term increase in contributions to allow negotiations to take place, employers pledging the same level of covenant support they gave to their own proposals, and a guarantee that contributions would not exceed 25.2 per cent for employers and 9.8 per cent for members.

“Time is now running out for UUK to walk back from its devastating cuts to pensions which will wipe tens of thousands of pounds from the retirement income of university staff.

"If UUK presses ahead and ignores this request, even after its proposals were proven to be completely unnecessary, it would be an unforgivable act of arson on a good pension scheme and the higher education sector more widely,” she wrote. 

“I am requesting UUK respond to this request urgently so that the changes scheduled for April 1 can be halted.”

In the meantime, UCU is holding another round of industrial ballots, which will run until April 8. If successful, the union would secure a mandate for strike action throughout the rest of 2022, as well as action short of a strike, such as marking and assessment boycotts.

A UUK spokesperson said: “USS made clear this week at the Joint Negotiating Committee that without the latest reforms we would not have seen such an improvement in the funding position, which remains very volatile month-to-month.

"The USS trustee has also indicated that the required rate for previous benefits would likely be in excess of 40 per cent of salary — even with the same level of covenant support employers have pledged under the package of reforms.

“Should the conditions seen in the last month prevail at the next valuation, it may be possible to reduce contributions or increase benefits or some combination of both. We remain open-minded about the optimal timing for the next valuation and look forward to seeing the more in-depth analysis of the position at the end of March 2022, which should be ready in May.”