51福利

听听听听听听听听听听听听听听听听 听听听听 51福利BAN/HE80听听 2 June 2022

University and College Union
Higher Education Branch Action Note


To

All Higher Education Branch Secretaries, Presidents and Chairs

 

Topic

Superannuation Working Group (SWG) report on USS to the HESC 2 June 2022

 

ACTION

To note the report

 

Summary

This Branch Action Note provides a report on developments with USS and outlines the recommendations carried by the April SHESC

 

Contact

Paul Bridge, Head of Higher Education

 

________________________________________________________________

Dear colleagues

Please find below the Superannuation Working Group (SWG) Report to the HE Sector Conference (HESC) at Congress June 2022, which appears as motion HE1 on the Agenda.

Introduction

This short report supplements and updates the SWG report carried by the Special HE Sector Conference on 27 April 2022 which can be found here;

It confirms the future focus and work of the SWG agreed by the SHESC and is for information only.

Ongoing work of the Superannuation Working Group

Since the SHESC report, your SWG have been involved in a number of work streams 鈥

       Submitting a response to the consultation on USS鈥檚 Statement of Investment Principles.USS鈥檚 investment strategy indicates that the Trustee believes that a high level of prudence remains necessary in the running of the scheme.Once again SWG explained its view that the primary aim of the investment strategy should be to ensure that the scheme is able to pay pensions as they fall due and expressed concern that the increase in leverage proposed will introduce potentially significant risks into the scheme in a period of high market volatility.Opposition to de-risking was also expressed as it too exposes the scheme to risk.Given the strength of the scheme鈥檚 asset base and sponsor support, these risks seem unnecessary.

       Meeting with the 51福利 appointed Directors to share information and matters of concern.

       Meeting with USS representatives to discuss the way in with their Financial Monitoring is reported.The purpose of this meeting was to ensure that the reports are as accessible and meaningful as possible, building on changes suggested by both 51福利 and UUK in recent months.The SWG want to see improvement in the quality of reporting so as to facilitate better decision-making 

       Attending as observers a briefing session about two Canadian pension schemes in the education sector that are run on a conditional indexation model.

SWG remain committed to exploring lower cost options for scheme membership. No further formal work with UUK has been progressed on Low Cost Options since the SHESC report but a facilitated workshop is being planned.

SWG are supporting work with external stakeholders, including putting pressure on TPR and the Government and shadow cabinet.

The SWG have also been discussing the reported improved financial position of the scheme and whether and how that, in combination with the change to the Bank of England base rate, may provide opportunity to increase member benefits.

Looking to the future

SHESC in April agreed that 51福利 should-

       Continue to defend USS as a predominantly defined benefit pension.

       Continue to push for a new, moderately prudent evidence based valuation of the scheme, requiring UUK to apply continuous pressure on USS and the Pension Regulator to support this approach.

       Demand UUK be required to commit to providing the same high level of covenant support for all future proposals regarding benefits and contributions, not just their own.

       Continue to explore the feasibility and promise of Conditional Indexation (CI), involving an assessment of its drawbacks as well as its merits.

       Pursue reform of the governance of the scheme, and legal challenges where necessary, to ensure that the USS trustee is held accountable for failures in their fiduciary duty to members.

       Continue to push for USS to have the strongest possible meaningful ethical and responsible investment policy, covering human rights as well as carbon emissions, and for it to be Net Zero for Carbon well before 2050 (its current 鈥渁mbition鈥).

The HESC also mandated 51福利 to -

       Harness the expertise of the USS Pension Officers in Pre-92 branches and encourage branches to use the 51福利 briefings to engage with employers and members to explain the urgency of the threat to their pensions.

       Draw on motions from previous sector and special sector conferences plus a review of the recommendations from the two JEP reports to formulate governance reform proposals that will ensure that the member voice and experience drives USS forward.

       Consolidate SWG work on ethical and responsible investment in USS with other 51福利 work e.g. on sustainability, human rights and decolonisation, and consider strengthening links with and encouraging members to get involved in Ethics for USS.

       Construct formal Terms of Reference for SWG to ensure clarity of purpose and reduce duplication of effort/resource.

The improved financial position of the scheme shows that USS is a strong and sustainable scheme, and validates our demand that UUK revoke the cuts it proposed and were enacted as a result of the 2020 valuation. We need employers to put pressure on UUK to resolve this dispute and commit to improving member benefits.  Therefore, SWG would like to encourage all USS branches to seek formal engagement with their employer, if they have not already done so, with the aim of achieving consensus on the way forward for USS.This has been achieved by a number of branches already and should cover issues such as

       The need for moderately prudent, evidence-based assumptions in any future valuation of the scheme

       A commitment to improve member benefits as soon the scheme's funding position allows rather than seek to reduce member and/or employer contribution levels

       A commitment from employers to provide enhanced covenant support through any future valuation process and for this to apply to any benefit proposals formally presented through the JNC by either UUK or 51福利.

SWG members are available to speak to branch meetings and answer members鈥 questions.

 

Paul Bridge

Head of Higher Education

 

 

 

 

ACTION REQUIRED: [to note the report]