All entries for Wednesday 21 January 2015

UCU members should vote NO in the e–ballot on the future of USS

I hope members will vote NO. What the employers are offering is fundamentally not in the long term interests of the union members. Nor is it in the interests of the institutions which wish to offer good pensions as part of an attractive remuneration package. The pre-92 universities surely do not want to be in the position where they are offering pensions that are inferior to the post-92 sector.

We have been challenging the methodology by which the USS is valued. The trustees have made assumptions about the distant future that are overly pessimistic in the name of prudence. But if prudence is taken too far it means members have to pay huge sums to compensate undermines the whole basis of the scheme. Most of the deficit (if not all) is caused by this. We are told the deficit is thought to be about £12 billion - but over £5billion is due to a policy of 'de-risking' that we are being asked to agree to. This means we agree to the USS adopting a policy of not investing long term as it always has tended to in the past in order to get the best income - but instead investing in low-yielding government bonds (gilts). So we are having to pay for this. The rest of the deficit is due to overly prudent assumptions - expecting high inflation in the future, higher salary growth than in the past, increased longevity (the employers pension forum were found out to have made outrageous claims about life expectancy in the USS increasing faster than ever into the indefinite future and were forced to withdraw by Warwick statisticians), continued poor economic growth, continued very low interest rates, etc. If they can think of a risk they put it in and charge for it.

The UCU commissioned a report from First Actuarial that proved that if the scheme is valued on an ongoing basis (like the TPS) it might very well not be in deficit. They asked for further information. The negotiators however seem to have ignored this report and have apparently accepted the trustees' agenda. Certainly they have said nothing about it in their email to members. We should be negotiating on the basis of the FA report. Our negotiators should be asking for the data that FA have asked for in order to carry out a proper valuation on an ongoing basis.

Dennis Leech : 21 Jan 2015 11:11 |  Tags: Pensions Uss; |  Comments (0) |  Close comments |  Report a problem