Update 13 March 2019: Response to UUK on 2018 valuation
Universities UK (UUK)
A consultation by UUK with USS participating employers
The 2018 actuarial valuation and the provision of contingent support
Response by the University of Oxford
The University is pleased to respond to UUK’s consultation on the 2018 actuarial valuation and the provision of contingent support. The University understands that UUK will prepare a collective response on behalf of employers when responding to the USS Trustee’s:
- Consultation on the proposed Technical Provisions and Statement of Funding Principles for the 2018 actuarial valuation dated 21 December 2018;
- Invitation for UUK, in consultation with employers, to propose a contingent contributions arrangement that they feel able to support (following the USS Trustee’s decision not to propose a contingent contribution arrangement that it would be willing to accept).
This response has been prepared by a working party set up by Oxford University Council to consider the funding and benefits of the USS. In reaching its views, the working party has sought specialist advice from independent actuaries.
Formal consultation response
UUK has invited employers to respond to their consultation by expressing views on the following three specific questions to which we provide our response.
- 1. Do you have any specific comments on the proposed assumptions for the 2018 valuation, including views on the proposed upper bookend and lower bookend?
The University’s overarching view is that the proposals put forward by the JEP had the support of both the employers’ and employees’ representatives and should be acceptable to the USS Trustee without the need for contingent support. Therefore, the University does not agree with the proposed assumptions for the upper bookend which makes no adjustment for any of the JEP proposals. The University supports UUK in its proposal to ask the USS Trustee why they take a different view to the JEP that contingent support (other than that already available to them) is required now before any of the JEP proposals can be implemented or phase 2 of the JEP completed.
Even without any of the JEP proposals being factored into the 2018 valuation the University notes that the upper bookend assumptions result in the deficit reducing from £7.5Bn to £3.6Bn with no apparent reduction to the deficit contributions (which appear to remain at 5%). The University does not support this approach to setting deficit contributions and believes an approach consistent to that used for the 2017 valuation should be adopted (i.e. similar recovery plan end-date and outperformance allowance) with consideration given to what employers can reasonably afford over the longer term.
The University would also point out that the upper bookend assumptions assume that de-risking starts immediately following the valuation (rather than being deferred 10 years, as was assumed in the 2014 valuation and recommended by the JEP) and that maintaining deficit contributions at 5% at a time when risk/volatility is being reduced and the deficit has halved is inappropriate.
Whilst the lower bookend allows for some, but not all, of the JEP proposals the University could accept the assumptions proposed for the lower bookend which produces a deficit of £2.2bn and an overall contribution rate of 29.7% as an interim step until the JEP completes its phase 2 review.
- 2. Do you support UUK putting forward a proposal for a CCs arrangement to the USS Trustee as it requested? If not, would you prefer to pay at the upper bookend level, or what would your preferred response be?
No. The University does not believe that a CCs arrangement is needed to support the lower bookend position. The University believes that the levers already available to the USS Trustee allow sufficient flexibility to control the contributions payable to the USS during a period of sustained deterioration in the funding level. The added complexity (and monitoring costs) associated with a CCs arrangement, that would require further consultation with members on rule changes, would be premature given the intention of the JEP to consider CCs arrangements as part of its phase 2 review.
As discussed in our response to question 1, the University does not believe it is appropriate to pay the upper bookend level, as defined by USS, given the reduction in the deficit from the 2017 valuation (i.e. from £7.5Bn to £3.6Bn using the upper bookend assumptions). The USS Trustee’s proposal to maintain deficit contributions at 5% regardless of the improvement in the funding position appears to reduce the recovery plan length by c5-7 years (compared to the 2017 valuation) and the University does not agree with this approach.
If the USS Trustee insists on using the upper bookend assumptions the University asks that UUK negotiate for lower deficit contributions by adopting a recovery plan which is more consistent with that agreed following the 2017 valuation (i.e. in terms of recovery plan assumptions and length) – as put forward by the UUK proposal.
- 3. Do you find the proposal for a CCs arrangement set out in the Aon note acceptable, taking all factors into account? If not, what aspects would you wish to change?
If a CCs arrangement were to be imposed on the University (for example, due to the majority of employers wanting to offer the USS Trustee a CCs arrangement) the proposed arrangement put forward by Aon on behalf of UUK has some merit provided:
- Any rule change required to allow implementation of a CCs arrangement would be time-limited to only be applicable until the next Schedule of Contributions is signed;
- There is no commitment to any future CCs arrangement being maintained after completion of the next formal actuarial valuation (due in either 2020 or 2021);
- It would be reviewed as part of the work to be undertaken by the JEP in phase 2 of their review and that the outcome of the JEPs phase 2 review would inform the next valuation;
- Technical Provisions (or a close proxy to them), not a self-sufficiency basis, would be used as the trigger metric; and
- The timetable/methodology proposed for by Aon for determining whether a trigger point is breached (i.e. covering frequency of monitoring, smoothing and the period over which a breach must be maintained) is taken forward.
We hope this response will assist UUK in its negotiations with the USS Trustee in relation to the 2018 actuarial valuation.
For the University of Oxford
Council's USS Working Group
12 March 2019
Update 14 January 2019: Response to UUK on 2017 valuation
Universities UK (UUK)
Proposal to finalise the 2017 actuarial valuation
Response by the University of Oxford
The University is pleased, via UUK, to share its views on the USS trustee company’s proposals to conclude the 2017 actuarial valuation of the Universities Superannuation Scheme (USS).
This response has been prepared by a working party set up by University Council to consider the funding and benefits of the USS. In reaching its views, the working party has sought specialist advice from independent actuaries.
The University is appreciative of the material produced by the USS and UUK to help conclude the 2017 actuarial valuation. The University understands that formal consultation for the conclusion of the 2017 actuarial valuation began on 5 December 2018 and will conclude on 11 January 2019.
The University had hoped that the 2017 valuation could be concluded without having to introduce significant stepped increases to employee and employer contributions from March 2019. However, the University recognises the need to complete the 2017 valuation following prolonged valuation negotiations and consultations. We also recognise that the cost-sharing provisions under Rules 76.4-8 need to be implemented to conclude the valuation and submit the required legislative documents to the Pensions Regulator. After reviewing the documents, the University has the following points we should like to make clear:
- The USS Trustee could credibly accept deficit recovery contributions lower than the proposed 6%, with the continued inclusion additional investment performance as assumed in the previous valuation.
- The USS trustee should not give undue weighting to short-term market movements, given the long-term nature of the scheme and its covenant.
The University has no further comments on the proposed Schedule of Contributions or Recovery Plan other that noting that the University views these documents as an interim step before a new valuation can be undertaken.
In this regard the University welcomes the agreement from USS to undertake an actuarial valuation as at 31 March 2018 and would hope that the outcome of the 2018 valuation, in considering the points raised by the JEP, results in more favourable contribution outcomes for both employees and employers compared to the 2017 valuation. In particular, following completion of the 2018 valuation, the University would hope that the significant contribution increases currently expected (from 1 October 2019 and 1 April 2020) could be avoided but note the concerns raised recently by the Pensions Regulator.
We hope this response will assist UUK in finalising the 2017 actuarial valuation with the USS Trustee.
For the University of Oxford
Council's USS Working Group
11 January 2019
Update 12 November 2018: USS employer consultation - University of Oxford Response
The rules of the University Superannuation Scheme (USS) include a default cost sharing process for dealing with circumstances where an actuarial valuation reveals an increase in the
employers’ aggregate contribution is required and the Joint Negotiating Committee (JNC) does not decide how to respond to it. Under the cost sharing process, the increased cost of providing
the scheme’s benefits is addressed through cost sharing between members and employers – revising the contributions payable to the scheme so that they provide the required level of
funding. The proposed changes to the scheme are “listed changes” for the purposes of The Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous
Amendment) Regulations 2006 (as amended for multi-employer schemes), so a statutory consultation with affected employees and their representatives (Oxford UCU) has been
undertaken by the University as employer.
The Equality Impact Assessment (EIA) document on proposed reforms to the USS is also available here.
Update 9 October 2018: UUK consultation on Joint Expert Panel - Oxford's response October 2018
USS Review Working Group: A consultation by Universities UK with USS’s participating employers on the Joint Expert Panel recommendation
The University’s Council has established the USS Review Working Group ("the Group"). One of the roles of the Group is to respond to consultations from Universities UK on behalf of the University of Oxford.
The Group met on 25 September 2018 to consider, amongst other matters, the Report of the Joint Expert Panel issued on 13 September 2018.
The response drafted by the Group on behalf of the University, endorsed by Council, was submitted to UUK as follows:
1. Would your institution support the JEP recommendations regarding the 2017 valuation (see Table 2 - page 10), in overall terms, subject to the acceptance of such a position from the USS Trustee (and TPR as appropriate)?
Yes - subject to the acceptance of such a position from the USS Trustee (and TPR as appropriate)
2. What further information would you need to provide a final view for question 1?
None at this stage - given that we are being asked for a response on the summary of the JEP recommendations in table 2.
3. Employers currently pay 18% towards the USS scheme, and the mandate agreed immediately following the Acas discussions was 19.3%. If the recommendations of the JEP were accepted in full by all parties, the outcome would be that existing benefits - minus the employer match of 1% - could be provided at an indicative employer contribution of 20.1% of salary (with a member contribution of 9.1%).
(a) Would you accept employer contributions at that level?
(b) If not, what balance of additional risk, higher contributions and/or benefit change would you prefer to see as an outcome?
(a) Yes, through to the conclusion of the next valuation.
(b) Not applicable
Update 14 September 2018: First report from the Joint Expert Panel
The first report from the Joint Expert Panel set up by Universities UK (UUK) and the University and College Union (UCU) has been published. You may remember that the Panel’s agreed purpose is to:
- make an assessment of the 2017 valuation of the USS fund
- focus in particular on reviewing the basis of the scheme valuation, assumptions and associated tests
- agree key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund
The information from UUK below provides a link to the full report.
The Panel is recommending four areas where adjustments to the pension valuation should be considered:
A re-evaluation of the employers’ attitude to risk, which would result in a re-evaluation of the reliance on the sponsor covenant.
- Adopting a greater consistency of approach between the 2014 and 2017 valuations, which affects the scale and timing of deficit recovery contributions.
- Ensuring fairness and equality between generations of scheme members by smoothing future service contributions.
- Ensuring the valuation uses the most recently available information which means taking account of recent market improvements, new investment considerations and the latest data on mortality, for example.
A key sentence in the report says: “The level of benefits is a matter for the stakeholders to negotiate. However, it is the Panel’s belief, based on independent actuarial analysis, that the full implementation of these adjustments could mean total required contributions estimated at 29.2% to fund current benefits (minus the 1% match). This compares to the current rate of 26% (18% of salary paid by employers, 8% by employees) and the rate of 36.6% from April 2020 which is proposed by USS, based on the valuation as it stands.”
Please note that consultation on 76.4 (the legal mechanism in the USS rules which allows USS to impose a valuation on universities if no decision is reached between employers’ and employees’ representatives) continues but may be superseded by the outcome of negotiations based on these recommendations.
Information from UUK
The full report and an executive summary can be found here.
The Panel was set up by the University and College Union (UCU) and UUK in the light of industrial dispute earlier this year over USS.
The JEP has undertaken a retrospective review of the 2017 actuarial valuation, including an assessment of the methodology, assumptions and processes underpinning the valuation. In its report the Panel has then gone on to explore the scope for possible adjustments to various elements of the valuation which the panel believes would allow it to be concluded. A number of related observations and recommendations have been included in the panel’s report.
UUK is pleased to receive the JEP’s independent analysis of the valuation. The JEP was established to help in building confidence, trust and increased transparency in the valuation process, and we hope by this report that those objectives have been met. We also believe that it will assist in creating the space for UCU and UUK to find common ground to conclude the 2017 valuation.
Next week, UUK plans to start the process of consultation with all USS employers on their views on the Panel’s recommendations, to inform talks with UCU and the USS Trustee. This will include examining employers’ willingness to accept greater levels of risk, and to pay more into the scheme than the current employer contribution of 18% of salary.
UUK believes that potential responses include employers taking on greater levels of risk, stakeholders paying higher contributions, the USS Trustee updating the valuation assumptions and stakeholders agreeing some moderate adjustment to benefits. Any solution is likely to require a combination of these and must be consistent with the statutory and regulatory duties of the USS Trustee and the Pensions Regulator.
The publication of the JEP report does not alter the status of the current consultation by employers on the Trustee’s cost-sharing proposals which is ongoing and due to conclude on 2 November.
Update 30 July 2018: Email to all USS members from the Director of Human Resources
We updated you earlier this month that the USS pension scheme trustees intended to propose contribution increases from both employers and employees.
The USS trustees have now published details, which will be consulted on, of how the proposed increases would be implemented in phases from April onwards next year. As you know, Universities UK and the Universities and College Union are separately discussing the USS scheme valuation, which may lead to alternative proposals being agreed later in the year. However, for the moment, the USS is legally obliged to bring forward proposals based on the existing valuation. The trustees have said these contributions are necessary to maintain current pension benefits for staff and to meet the requirements set by the Pensions Regulator.
Under existing cost sharing rules agreed by UUK and UCU, the University, as the employer, is obliged to pay 65% of any increase and employees the remaining 35%. The trustees are proposing the following contribution rates:
From 1 April 2019
From 1 October 2019
From 1 April 2020
You can find further details from the USS trustees here. There is more information on what these proposals mean for you, including worked examples on the University’s pensions website here. There is also a Q and A here explaining why the USS has to take this step now.
We would stress again that the joint UUK and UCU discussions may overtake these proposals. They may not be implemented, or only introduced temporarily. However, as they stand, the proposed contributions would obviously present a challenge for members of staff and for the University.
The University has a duty to consult fully with staff on these USS proposals. Details on consultation sessions and online survey arrangements will be circulated shortly. In the meantime, if you have any questions or comments on the USS announcement, please do raise them for discussion with Council members via the University’s online pensions forum.
Update 11 June 2018: Email to all USS members from the Vice-Chancellor
As we enter the summer months I thought it might be useful to update everyone on where things stand with the dispute over USS pensions. Colleagues within the University and across the country are working assiduously in an effort to arrive at a solution that provides the best possible affordable pension for all USS members.
Nationally, the Joint Expert Panel has been convened and the remit has been agreed. Reports of the meeting are available on both the UUK and UCU websites. The panel will continue to meet throughout the summer with a plan to produce a report in September. Any agreement the panel reaches will help the Joint Negotiating Committee devise a proposal on which there would be a national consultation.
Meanwhile, the pension trustees have indicated their intention of preparing for the implementation of rule 76.4 which would raise pension contributions from the current 26% to 37% in the absence of an agreement.
Within the University we have a number of initiatives underway to ensure broad consultation on the issues and open discussion of any trade-offs that may need to be made. Our USS Review Working Group will be meeting during the summer to explore creative ways we might be able to arrive at a pension scheme that maximizes benefits while proving affordable for the University as a whole. A list of the members of our USS Review Working Group is available here.
We will also hold open fora on Pensions to provide information and facilitate discussion of the issues. The first of these will be held on June 12th at 10:30am in the Saïd Business School. I hope as many of you as possible will attend. Please feel free to submit questions in advance to email@example.com or bring your questions to the meeting. Please register to attend this event here.
In addition to creating a new online forum, a new pensions site has been developed within the Staff Gateway to try to make comprehensive information about pensions more accessible. There are also links on this page to other sites, such as the USS, UCU and UUK to make it easier for you to stay abreast of developments over the coming months.
I hope that the wounds caused by this dispute are starting to heal and that we can work together in order to be in a better position to respond to the results of the national negotiations in the autumn. I believe that active engagement and open communication are critical and hope that everyone interested will engage with the opportunities outlined above.
Update 2 May 2018: Gazette notice
Update 27 April 2018: Joint Negotiating Committee (JNC) meeting
The JNC resolved to revoke its 23 January resolution on benefit reform. The USS Trustee had requested that the JNC make its position known by 30 April.
The USS trustee has indicated that they are minded to take forward Rule 76.4-8. This allows for the imposition of increased costs on employers and scheme members and the trustee has indicated they will work towards implementing this from 1 April 2019. This would enable the trustee to be in a position to demonstrate compliance with its statutory responsibilities and accountabilities to the Pensions Regulator. UUK is seeking urgently clarification on the Rule 76.4-8 process before it commences.
Update 19 April 2018: Gazette notice
Update 16 April 2018: Email to all University and College staff from the Vice-Chancellor
You will by now have received the welcome news that the members of the University and College Union have voted in favour of the most recent ACAS facilitated proposal, namely the creation of a Joint Expert Panel to agree key principles to underpin the future joint approach to the valuation of the USS fund. In so doing, they have given the UCU leadership a mandate to suspend industrial action with immediate effect.
This is very welcome news to our whole community, but especially to our students, who can return for Trinity term confident that their studies will not be disrupted in this critical exam period. The suspension of industrial action also gives us an opportunity to come together as a community to address what remains a really difficult challenge.
The first step in this process will take place on 24 April when Congregation will convene to discuss the pensions issue. Any and all views will be welcome, as will creative ideas on how we might realize the commitment Council has made to seek pension provision for USS members employed by the University that is of the same standard as currently available. The details of the meeting will be in Thursday’s (19 April) Gazette. If you are a member of Congregation and would like to speak, please let the Secretariat know in advance by emailing firstname.lastname@example.org .
A number of practical questions about the composition and remit of the Joint Expert Panel remain to be agreed between UUK and UCU before the terms of reference and timescales can be published. Given the statutory responsibilities of the USS Trustee and the Pensions Regulator their support for the process must also be secured. I very much hope that in reviewing the assumptions in the current valuation, this panel will increase the transparency of the process and build confidence in the result.
We will continue to provide regular updates on local and national developments.
Update 13 April 2018: Statement from the University and College Union
The USS consultation closed at 2pm today. The result was as follows:
Total balloted: 53,415
Total votes cast: 33,973
Total number valid votes: 33,913
Yes to accept the UUK offer 21,683 (64%)
No to reject the UUK offer 12,230 (36%)
In line with the decision of members the union will suspend its immediate industrial action plans but keep our legal strike mandate live until the agreement between UCU and UUK is noted by USS.
Response from Universities UK on behalf of employers including Oxford University:
'The decision by UCU members to support the creation of a Joint Expert Panel means that strike action is immediately suspended. This gives students important reassurance that they won’t be affected by further disruption during their summer study and exam period.
'Reviewing the methodology and assumptions in the current valuation will build confidence, trust and increase transparency in the valuation process. It will provide an opportunity to consider the questions raised about the valuation by scheme members and employers. It is important that interested parties engage with the panel and remain open-minded about its possible findings.
'Working in partnership with UCU, we will now appoint a jointly agreed chair for the panel as soon as possible before developing its terms of reference, order of work and timescales.
'Alongside UCU, we will seek support for this process from USS and the Pensions Regulator, fully recognising their statutory responsibilities and accountabilities. Current pension benefits are guaranteed until 1 April 2019, so the panel will need to conclude its work in time to put in place a sustainable way forward for USS from that date.'
Update 4 April 2018: Message from Council shared with all staff by the Vice-Chancellor
Council notes the ongoing negotiations between UCU and UUK and will make every reasonable effort to resolve the current dispute within the national framework of USS. Although the outcome of the current negotiations remains unclear, Council will seek to provide pension provision for USS members employed by the University that is of the same standard as currently available, subject to the duties of the Council, as a trustee body, to serve the interests of the University as a whole. Council resolves to treat achieving this objective as an issue of high priority for the University. It will ensure that all members of Council are fully involved in Council’s deliberations on pension provision, and that they will regularly review the delivery of the above objective and report to Congregation in a timely and transparent manner.
Update 23 March 2018: UUK statement
UUK has issued a statement on risk in response to concerns about the underlying assumptions of the valuation with the aim of restoring public confidence (Related Documents). UUK has undertaken to convene an independent expert group.
USS has published some new information on the 2017 valuation, addressing myths and misconceptions that have taken hold.
Update 22 March 2018: Universities UK statement on risk
Update 16 March 2018: Latest Briefing Sent from UUK
There is strong support amongst employers for the reform proposal jointly developed at ACAS. UUK is currently mapping out a range of options and considering how best to proceed. UUK must ensure that the employer position taken forward reflects the latest position for the majority of employers. Although the ACAS proposal would mean higher contributions for employers (at 19.3% of salaries) and for employees (at 8.7% of salaries), it offers a viable alternative to maintain defined benefit pensions for this valuation. UUK continues to seek a resolution to this dispute to avoid further strike action and more disruption to students' education. UUK is contacting UCU to better understand the reaction from their branch Presidents to the ACAS proposal. Clearly we all want to see an end to the current disruptive industrial action, however it must also be recognised that it is not clear at the moment what would be acceptable for UCU in terms of trying to reach a negotiated settlement to this dispute. In addition, the Pensions Regulator today signalled to UUK that it is reviewing the ACAS proposal and is likely to provide a view next week. They highlighted their concern about ‘any further dilution’ of the ACAS proposal and the risk that would entail for the scheme. As well as talking further with UCU, in the coming days we are seeking to hold an Employers Pensions Forum meeting and an extraordinary UUK Board meeting to review the employer position. Valuation UUK is making arrangements to establish the independent expert group on valuation as soon as possible. This will have an independent chair, involve academics and pension professionals, and liaise with both USS and the Pensions Regulator. The group will consider issues of methodology, assumptions and monitoring, aiming to promote greater transparency and understanding, and will take account of the real strengths, sustainability and viability of the scheme. Removing the indexation cap from the proposal developed at ACAS We have received correspondence today suggesting amending the proposal to include the scheme’s current levels of indexation and thought it would be helpful to share information about the costs involved. This change would require a further increase of c2.5% in contributions beyond those increases included in the ACAS proposal, split 65%/35% between employers and scheme members. This would take employer contributions to c21% of salaries. This change would also increase the risk in the scheme which could potentially be a concern for the Pensions Regulator.
- The future of university pensions is a matter of law. The Pensions Regulator has a responsibility to ensure the security of pensions, for the sake of all members. Employers must act in the interests of current and future members, to ensure existing pensions are secure and future pensions sustainable and attractive.
- The challenges facing USS are not unique and are challenges that have been faced by many other defined benefit (DB) schemes.
- Talks between Universities UK and UCU began in January 2017 and since then employers have put forward two proposals that secure the sustainability of members' pensions. Neither proposal was deemed acceptable by UCU.
- Employers have listened to the concerns that UCU set out on behalf of their members and compromised. Employers have proposed to increase contributions to the scheme to maintain meaningful defined benefits. The proposal jointly developed with UCU negotiators at ACAS would ensure that more than 50% of USS members retain full DB benefits.
- Given the concerns about how the scheme has been valued, we will establish an independent, expert group to examine the valuation assumptions which will report back as soon as possible.
- Faced with the prospect of employers and member representatives failing to agree necessary reforms, then the USS Trustee Board would have no option but to raise contribution requirements in line with the costs of current benefit accrual, without undue delay. This would mean that USS triggers automatic increases in salary contributions of c11%, split 65%/35% between employers and staff.
- All universities want an urgent, affordable solution to end this dispute which is having a damaging impact on students and staff.
Update 16 March 2018: Revised benefit proposals
The provisional agreement reached at ACAS on revised benefit proposals was not agreed by UCU’s Higher Education Committee (HEC) and consequently was not put to a Joint Negotiating Committee (JNC) meeting. As a result the decision of the JNC in January still stands, but the planned employer consultation on these proposals remains on hold until we receive further notice. The consultation will therefore not commence in the week beginning 19 March 2018.
Update 13 March 2018: Terms of a new joint proposal
Following more than a week of intensive ACAS talks between UUK and UCU, negotiators have agreed the terms of a new joint proposal to address the latest USS valuation. The agreed text of the full proposal is available from the right-hand column of this page (Related Documents). The agreement includes a solution to the current valuation and recognises the work needed to put the scheme on a sustainable footing for the future.
The proposal sets out a process whereby UCU would suspend industrial action from and including Wednesday 14 March. In addition, UUK has today asked USS to suspend the member consultation on the previous JNC proposal, which was due to commence on 19 March.
Update 13 March 2018: Valuation update
USS trustee provided an update on the valuation, highlighting six things that USS members should know about the valuation https://www.uss.co.uk/how-uss-is-run/valuation/an-urgent-update-from-the-trustee.
Update 12 March 2018: Agreement reached between UCU and UUK under the auspices of ACAS
Update 7 March 2018: Special meeting of Council
The special meeting of Council which was convened to review its position on the UUK survey of USS pension risks ended earlier this afternoon. Council has decided, in light of the meeting of Congregation yesterday, to reverse its previous response. In answer to UUK’s question “Does your institution support the level of risk being proposed by the USS trustee for this valuation?” Council’s position is now: “My institution accepts the level of risk being proposed by the Trustee”, and so its previous rejection of the level of risk proposed is changed to acceptance. This will be communicated to UUK later today. Council also withdrew its Notice Of Opposition to Resolution 5, the motion which was due to be debated at Congregation yesterday.
Council recognises that this issue should have been handled better. It has listened to and understood concerns across the University about the financial impact on staff who are members of the USS pension scheme, and it will continue to argue in favour of the best possible, sustainable pensions for all its staff. When Council meets again on Monday it will have a much fuller discussion about pensions, including ways in which it can ensure that it remains closely in touch with opinion across the collegiate University.
Update 28 February 2018: UUK open letter
Universities UK has issued an open letter detailing its position on the dispute over pensions (see related documents). It has reported that progress had been made in talks with UCU. http://www.universitiesuk.ac.uk/news/Pages/Progress-made-at-USS-talks.aspx
Update 23 January 2018: Decision on proposed benefit reform
A decision on proposed benefit reform has been reached by the USS Joint Negotiating Committee (JNC) with the JNC’s independent chair voting in favour of a revised employer proposal tabled by Universities UK (UUK). UUK’s statement on the proposed benefit reform gives details of the proposal and the background on the need for change to address the funding deficit in USS. In summary the proposal is:
Employer contributions - Employers will continue to pay a contribution of 18% of salaries towards USS, and it is proposed that this important commitment is extended from March 2020 to March 2023.
Member contributions - Members will continue to pay 8% of salaries towards USS. A new option is being proposed which would allow members to pay less (4% is proposed), whilst still benefitting from the full employer contribution of 18%.
Main benefit change - The JNC proposal is to change USS so that members earn defined contribution (DC) benefits on all of their salary from April 2019. Currently DC benefits are only earned on salary over £55,550, with defined benefits (DB) earned on salary below the threshold.
DC and DB benefits are quite distinct, and both have their advantages. In a DC scheme, members have individual saving pots (or funds) that both they and their employer pay into. At retirement, members draw their pension savings from their fund which consists of all of the contributions paid in plus the investment returns that have been earned. They can then choose whether they wish to take out all their retirement savings as a lump sum, or to opt for alternative options such as a pension (known as an annuity) or drawdown (where cash is drawn from the fund periodically).
More information on the difference between DB and DC pension benefits can be found on Universities UK’s website.
Update 23 January 2018: Statement of proposed benefit reform from UUK
Update January 2018: UUK call for evidence
Update 8 January 2018: JNC
As at 19 December 2017, the JNC had not reached a decision. UUK and UCU representatives have agreed formally to reconvene on 23 January 2018.
The USS trustee board has considered the implications of this. As explained in the USS valuation update available at https://www.uss.co.uk/how-uss-is-run/valuation/2017-valuation-updates/update-on-the-2017-valuation-funding-review the trustee board has taken steps to ensure that the valuation is completed by deadline of 30 June 2017 and triggered the default cost sharing arrangement to support the current benefits.
Update 13 December 2017: Email to all USS members from the Director of Human Resources
Dear USS member
USS is the pension scheme for staff in academic and academic related roles (Grade 6 and above).
As you will be aware there are significant changes to the USS pension scheme under discussion in the national-level USS Joint Negotiating Committee. Formal negotiations between employer and member representatives will continue during December 2017.
Any agreed changes to member benefits or contributions will require full consultation with scheme members and other affected employees in spring 2018. As you may also be aware the University and College Union (UCU) is currently balloting members on industrial action at Oxford and around fifty other research-intensive universities including Cambridge, Manchester and Imperial College London. The ballot – which opened on November 29 and closes on January 19 – has been called in response to these proposed changes to USS pensions.
This could result in industrial action from February 2018. Measures could include refusal to cover or reschedule classes, or to provide cover for sick colleagues – but the exact
nature of possible action has not been confirmed. The USS trustees have a legal obligation to review the pension scheme’s financial position. USS advisers estimate that the scheme has a deficit of c.£7.5 billion and that the cost of funding current benefits has risen by at least 11%.
To ensure its sustainability, employers propose that future benefits would be delivered by modifying the salary threshold so that pension saving would build up in the USS Investment Builder, the defined contribution section, with no further buildup of defined benefit pension. This proposal would tackle the current financial deficit and rising future costs, while ensuring USS continues to offer attractive pensions benefits to members.
Employers – including Oxford – have committed to maintaining their total employer contribution to USS at 18%, allocated towards ongoing buildup of new benefits, deficit recovery contributions, life assurance benefits and expenses. Any changes implemented to the USS benefit structure would only apply to the build-up of future benefits. Accrued pensions – built-up prior to any changes – are protected under law. Oxford’s own USS Review Working Group has considered this matter carefully, taking specialist advice from independent actuaries. The University has responded to two consultations on the issue, with responses submitted to Universities UK in March and September this year.
Details can be found at www.ox.ac.uk/Oxford&USS. The pages also provide answers to a range of questions, with links to relevant documents. UCU members can also access information from their union at https://www.ucu.org.uk/. The University will keep you informed and will also update you and all other employees on the outcome of the UCU ballot in due course. Our dedicated webpages will then provide updates on key developments.
Director of Human Resources