On 28 January, Tracey Hooper and Steve Condliffe, along with representatives from about 30 branches, attended a USS briefing for pre-92 branches on the dispute and its outcome.
Michael McNeil, National Head of Bargaining and Negotiations, spoke at length, well and from the heart. He stated that neither he (as a member of the final salary scheme himself) nor anybody in UCU could be happy with outcome and that he fully understood that branches and members were disappointed, disillusioned and many were angry. However, he truly believed that – given the challenging external landscape – it was the best outcome that could have been achieved through negotiation and better than what would have been achieved without the industrial campaign.
Our negotiators were clear that the employers were planning a preemptive move in the Joint Negotiating Committee (JNC) meetings in the Autumn. Our assessment and marking boycott was explicitly intended to stay their hand and force negotiation. Our action succeeded in that crucial respect to allow an intensive series of negotiating meetings to take place in December and January.
Michael reminded the meeting that UCU’s democratically-agreed policy had not been to defend the final salary scheme but to make incremental steps towards parity with the Teachers’ Pension Scheme (TPS) which becomes a CARE scheme from June 2015. The improvements secured mitigate some of the losses relative to the employer’s initial proposals; an increase in the benefits of new joiners; an improvement in inter-generational fairness; and is a shift in the right direction towards parity with TPS. He also reminded us that a voting conference in September had agreed the negotiating principles and the industrial strategy (a hard-hitting assessment boycott to preceed strike action).
Michael reiterated how difficult the negotiating environment had been against the backdrop of a statutory pension regulation process and a massive and ever-growing ‘headline’ USS deficit figure. The USS negotiations were not simple one-on-one or multi-employer national bargaining; other key statutory and independent interests are involved – particularly, the Pensions Regulator and USS Trustees, who set the objectives for scheme funding and rigidly control the timetable.
The Pensions Regulator’s only concern is to avoid pension schemes falling back on State-funded insurance (the Pension Protection Fund). As USS is the largest defined-benefit (DB) pension fund in the country, the Regulator is taking a very pessimistic view, aided by an actuarial profession that is ever more cautious and conservative. Michael likened the Pension Regulator to Banquo’s ghost, flitting in and out of the proceedings sowing doubt and fear from the perspective of a particular framework and ideology. Thus, for instance, the Trustees unexpectedly brought in an additional “three tests” at the behest of the Pension Regulator which further depressed the valuation (these are the ‘guiding principles’ on page 2 of USS’s Integrated Approach to Scheme Funding).
Michael also suggested that USS could no longer be controlled by the employers and union that jointly created it and that it certainly was no longer in the business of looking after members’ expectations. HE sector employment policy has little direct influence on the Trustees, whose only legal obligation is to guarantee that the fund can meet its future liabilities (pensions). UCU has no direct way to exert pressure on the Trustees (we cannot open an industrial dispute against them). The presence of an establishment Chair (Sir Andrew Cubie) with casting vote on the JNC Committee renders us vulnerable to the employers’ pushing through their proposals.
USS will now embark upon the statutory formal consultation with affected employees starting in mid-March and lasting no less than 60 days. Do not expect this consultation to overturn any of the main elements of the proposals, but it will be an opportunity to argue for further changes, especially if we can justify our suggestions by pointing to specific undesirable unintended consequences.
However, despite everyone’s best efforts there is no further prospect of persuading a majority of the USS Trustee Board to agree to a fundamentally different valuation methodology for the current valuation. As Jimmy Donaghey said, “the reality of us changing what is regarded as economic orthodoxy…is an immense task”. And even though we don’t like the rules, we are forced to play within them (non-engagement is to court worse imposition).
This does not mean that UCU accepts the methodology – far from it, the methodology is bad, ideological and plain wrong when applied to a multi-employer scheme. UCU has strenuously opposed it for years and will continue to do so into the next valuation cycles.
It is vitally important for future valuations that we continue to argue locally and nationally about the need for decent pensions for staff and to support sector employment policy. We need to convince them that the valuation methodology and their approach to pension benefits is wrong and harmful to recruitment and retention.
This is just the end of the first stage of our campaign.