Dear Bristol UCU colleagues,
You will have seen Chief Operating Officer Robert Kerse’s email, ‘An Important Update for USS members’. 15th September. Sadly, yet again, the University is supporting Universities UK (UUK)’s attempts to push through major cuts to our pensions.
Our flagship pension scheme, USS, has a large and valuable defined benefit pension component: ‘a type of workplace pension that pays you a retirement income based on your salary and the number of years you’ve worked for the employer, rather than the amount of money you’ve contributed to the pension’. The USS invests our contributions and guarantees a fixed pension. This guarantee is underwritten by our employers.
Under the current system someone born in 1996 starting on their career at the University today as a Grade J could expect to accrue a pension of £28.2k a year by the time they retire at age 68.
The UUK proposal represents a loss of between 14 and 54% of the value of the pension:
Projected value under the UUK proposals
- = £23.9k (-15%) a year if inflation remains low.
- = £13.4k (-53%) a year if inflation is moderately higher.
This represents a loss of £198k or £663k in the value of their pension at retirement if there is low or high inflation respectively.
How much pension do I stand to lose? Find out using our modeller [link].
Why does this matter?
Apart from the fact that you will have less pension in retirement, this matters because it doesn’t have to be this way. Our new pension deal is based on a flawed valuation, which was taken at the start of the coronavirus pandemic when the economic markets crashed. This valuation has been recognised as flawed by organisations including the employers’ actuary Aon, and a Joint Expert Panel. So why should we accept it?
The UUK Proposal
These proposals will very substantially reduce the pensions we receive when we retire, specifically they are looking to:
- Cut the fraction of our income we earn as pension each year from 1/75th to 1/85th;
- Cut the max level of income the pension is calculated on from £60,000 to £40,000;
- Cut the inflation protection from between 5% and 10% to 2.5%;
- Increase the employee contribution rate from 9.6% to 9.8% from October;
- Committing the University to supporting the scheme for the next 20 years.
The UCU proposal: fact check
In an email circulated to staff with USS pensions on 15 September (pasted below), Robert Kerse claims UCU did not bring a proposal to the Joint Negotiating Committee (JNC). These claims are incorrect.
UCU did bring a proposal to the JNC, but UUK refused to support it. Because of this lack of support, there was no chance of the UCU proposal being supported by the JNC chair. UUK effectively vetoed UCU’s proposal without meaningful negotiation or engagement.
Why is this happening?
We believe these changes are a continuation of efforts by UUK and USS to reduce Universities’ financial responsibility to ensure the health of staff pensions since 2017. Previously their approach was to transfer investment risk from the employer to the employee. Our strike action in 2018 stopped that from happening, but since then their strategy has changed and now they are trying to drastically cut benefits.
Bristol’s explicit support of the UUK proposal represents a fundamental shift in the attitudes and values of our employer.
The University needs to:
- As requested for the disputes over the 2017 and 2018 valuations, provide credible evidence to demonstrate that these reforms are necessary, and how they would affect different groups of staff.
- Demand that the UUK proposals are revoked,
- Reform the governance, oversight and accountability of the USS,
- Demand an evidence-based, credible, moderately prudent 2021 valuation, and
- Negotiate the best possible benefits and contribution rates under a 2021 valuation.
There are a large number of very serious concerns about the USS’s 2020 valuation, the UUK proposal, and how and why the University is supporting it.
Crucially, the University also needs to explain in open and honest terms how such a dramatic and deliberate reduction in staff benefits fits within its vision as an institution, otherwise this dispute will continue to spiral out of control.
All the best,
Jamie Melrose, James Thompson, Neil Davies, Chin Yang Shapland
Bristol UCU Pensions Working Group
We are writing to you as you are currently either a member of the Universities Superannuation Scheme (USS) pension scheme or are entitled to become one. We want to update you on current developments relating to your pension scheme.
The USS Trustee accepts UUK’s proposal to conclude the 2020 valuation
The USS Trustee has approved a recommendation by the Joint Negotiating Committee (JNC), comprising representatives for Universities UK (UUK), the University and College Union (UCU) and an independent chair, to adopt UUK’s proposal to conclude the 2020 valuation by the end of this month. This proposal offers future contribution rates which are more affordable than those originally proposed by the USS Trustee. These more affordable rates have been secured in return for employers offering greater covenant support through controls including employer borrowings and employer scheme exits to protect the scheme and current and future defined benefits.
Your contribution rate will rise from 9.6% to 9.8% from the October 2021 payroll. Employee contribution rates were due to rise to 11% in October 2021 in accordance with the terms of the most recent valuation (2018) if the 2020 valuation had not been completed this month. Your University’s contribution will also increase (21.1% to 21.4%).
The UUK proposal, approved by the JNC and USS, also involves a proposed change to future pension benefits. This change will not be made until April 2022 and is subject to a consultation with you. All USS employers will be asked to undertake the same consultation with their staff this calendar year. No changes will be made to the future benefits you earn from being a member of USS until this consultation is complete. Whatever the outcome of the future benefits consultation, there will be no change to the pension benefits that you have earned to date.
There will be very significant increases to future contributions for both staff members and employers if a change to future benefits is not agreed by February 2022.
You can read more information about this on our intranet page.
You may well receive media over the coming weeks from the trade unions challenging the adoption of UUK’s proposal and the new contribution rates, and promoting their own proposal. We are led to believe that during the JNC-led negotiations, the UCU, which are the union represented at the JNC, did not formally table an alternative proposal after multiple requests to do so. They also prevented UUK from sharing informal proposals with employers and scheme members for consideration.
As one of the 340 scheme employers, we believe the UUK proposal offers the most practical outcome to the negotiations and offers a workable and affordable solution to conclude the 2020 valuation for members and employers.
The collective nature of the USS scheme means that it is the majority collective view of employers that UUK adopts. We have worked very hard to influence the future direction of USS to obtain a fair deal and best achieve what we know you want. You can find copies of our consultation submissions on the pension page.
Our views differed from the majority of employers who, for example, were not prepared to pay more. We now stand behind the collective employer position determined by UUK. It is not feasible for us to leave USS given the moratorium on employer exits and the cost that would arise in the very unlikely event that USS approved our departure.
Employers remain open to considering alternative benefit structures and formulations, provided they are viable, affordable and implementable.
Find out more about your USS benefits and the 2020 valuation issues
Based on your feedback to a survey we sent you earlier this summer, we are putting on two virtual seminars this term to support your understanding of the benefits you receive from being a USS member and to help your understanding of the 2020 valuation.
These are as follows:
12 & 14 October, 13.00 – 13.50: USS benefits and how the scheme is run
19 & 20 October, 13.00 – 13.50: The 2020 valuation
More details will be made available shortly, with joining instructions.
We will continue to send you updates like this periodically, and through the weekly Staff Bulletin. Regular updates are posted on the USS pension SharePoint page to give you quick and easy access to the developments. You can also find background information about the scheme itself on this page.
Please do send your feedback and any queries to me at email@example.com.
Chief Operating Officer