The management and UCU at the University recognise that the recent valuation of the USS pension scheme has been very challenging for all involved. While we have differences of view on the need for benefit changes resulting from the 2020 valuation, we do agree that a trusted and valuable pension scheme is an important part of our employment terms and conditions, and we are committed to supporting national efforts to deliver this.
We believe that the current approach to valuation of the USS pension scheme is pessimistic given its continued growth and underlying strength, and how that valuation is regulated needs to be reviewed to reflect the unique nature of the scheme and the sector. The scheme needs to invest for the long-term, delivering the best pensions for an affordable level of contributions.
The way the pension scheme is designed needs to meet the needs of members and employers. The recent cycles of cost increases and benefit changes do not give confidence to members of the scheme, and we are concerned at the number of people who opt out of pension provision. We are particularly concerned about the situation for lower-paid and early-career staff. As such, we believe that the current scheme design needs to change.
We recognise that the national bodies – UCU and UUK – have started work to develop an improved design for the pension scheme and we welcome all signs of a willingness to consider alternative approaches. As such we urge the national bodies to:
- achieve the best possible pension for affordable contribution rates. Some have proposed a total contribution (employer + employee) of 25-30% of salary which we believe is a reasonable target for full benefits, but should not preclude innovation for lower-cost options to enable all to afford membership of the scheme;
- establish an agreed, joint approach to and principles of scheme valuation which meet the needs of the Trustees and Regulator, but truly reflects the strength of the sector and employers’ risk appetite. A joint valuation forum should be a formal part of the USS governance structure and we would expect it to consider, inter alia, the recommendations from the Joint Expert Panel which were not adopted in the 2020 valuation;
- carry out a new valuation at the earliest appropriate opportunity. It is not clear whether a 2022 or 2023 valuation is the best possible option.
- explore the feasibility of alternative scheme designs. Conditional indexation has been proposed as one alternative which allows employees and employers to share the risks and rewards in a more controlled manner, but we are also open to other innovations which provide flexibility and choice;
- continue the work on governance reform to provide a more sustainable, and more joint way of managing this scheme for the future. Long-term trust and faith in the scheme is essential if we are to deliver against the needs of both scheme members and employers;
- call upon USS, through their investment strategy, to accelerate action to address climate change issues in line with the Universities Carbon Action Framework.
Following the JNC vote, UUK stated that they would be willing in principle, subject to views of employers, to improve benefits at the next valuation if the funding position of the scheme allowed. While such a decision relies on the outcome of the valuation, the University of Bath agrees with this principle, and if practicable, would like to see such recovery sooner.
All parties to this statement would also like to renew our commitment to working together and consulting each other as the USS scheme develops. This is an important topic to so many staff, and it deserves priority and attention to ensure that it meets the future needs of this University.
Professor Ian White, Vice-Chancellor & President Dr David Moon, Branch President, UCU