Dame Denise Holt, Chair of Council
On 7 May, a meeting of Council took place to consider our position on a consultation by Universities UK (UUK) on the future contributions of both staff and employers to the USS pension scheme and on some wider questions about the nature of the scheme, with a view to forthcoming negotiations.
Colleagues will recall that USS Trustees* are the decision takers, not the individual institutions, and in turn USS is subject to rigorous regulatory oversight by The Pension Regulator.
As you know, the outcome of the 2020 valuation of USS revealed a very significant deficit, with wide-reaching implications for universities like Sussex and for a large number of our staff. The main concern for Employers, Trustee and Regulator alike is to safeguard the ability to pay staff, both now and in the future, the pensions they have accrued. All are, however, mindful that without some reform, pension contributions risk becoming too high for younger staff, who risk not having any pension.
At the meeting on 7 May, the Vice Chancellor noted common ground between the Executive and UCU. Both believe that the USS Trustee is taking an overly prudent stance and that the strength of the employer covenant has not been accurately priced in.
However, even allowing for an unduly cautious valuation, there remains a significant deficit and in the Vice Chancellor’s view concerns about the scheme were valid. During the lengthy negotiations to date, a number of options had been considered and discarded. We had now reached a point where, if no solution could be agreed, higher contributions for both parties would be imposed by the Trustee.
Overall support for the University’s proposed response:
In a very thoughtful discussion, all members present gave their views. With some differences of emphasis, lay members of Council felt that the University’s position was thoughtful, considered and measured, but should be expressed in tougher language. They saw UUK’s proposal as a substantial improvement on USS’s default option, which would see contribution rates rise to an unaffordable level for many members of staff and most universities.
Independent members expressed general dissatisfaction with USS’s handling of the issue, notably its refusal to review the valuation and its failure to make provision for younger members. However, overall it was accepted that whilst more time to consider alternative options might be helpful, the scheme was already highly likely to be in breach in terms of the deadline for the valuation to be signed off.
Whilst the above achieved a majority consensus, staff and student members argued strongly that Council should reject the proposed response, on the grounds that the 2020 valuation was not fit for purpose, and was not sufficiently focused on the needs of staff.
Council noted that a wider consultation of staff has been conducted, and we agreed that the Vice Chancellor and I should make ourselves available to brief members of Council later this month (and before the response to UUK is submitted) to share any significant new points and address any new issues members of Council may wish to raise.
As a result of the meeting the final return will strongly articulate concern at the high opt-out rate for younger staff for whom the scheme’s exclusivity clause mean we cannot contribute to alternative pensions for those who opt out. We also noted concerns about the scheme’s governance arrangements and the validity of the valuation.
What happens next:
The University has two weeks before the consultation closes and will be spending that time finalising its response in light of the comments at Council and the feedback provided by USS-eligible staff, submitted via the survey that closed on Friday.
As is the norm for most institutions in agreeing a negotiation position, Council won’t be publicly sharing the full response, however we will continue to keep the community abreast of the ongoing situation.
*Correction – the original version of this news story (published on Weds 12 May) incorrectly stated that the USS Trustee comprised equal representation from UUK, UCU, and independent (lay) members. This has since been removed. For clarification, the USS Trustee is made up of four appointed members from UUK, three appointed from UCU and five independent members (including the Chair). The JNC, which is responsible for deciding how the USS valuation should be dealt with, is made up of equal members from UCU and UUK, plus an independent chair.