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
To |
All
Higher Education Branch Secretaries, Presidents and Chairs |
Superannuation Working Group (SWG) report on USS to the HESC 2 June
2022 |
|
ACTION |
To note the report |
Summary |
|
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.
Since the SHESC report, your SWG have been involved in a number of work
streams 鈥
路
Submitting a response to the consultation on
USS鈥檚 Statement of Investment Principles.听
USS鈥檚 investment strategy indicates that the Trustee believes that a
high level of prudence remains necessary in the running of the scheme.听 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.听 Opposition
to de-risking was also expressed as it too exposes the scheme to risk.听 Given the strength of the scheme鈥檚 asset base
and sponsor support, these risks seem unnecessary.听
路
Meeting with the 51福利 appointed Directors to share information and
matters of concern.
路
Meeting with
USS representatives to discuss the way in with their
Financial Monitoring is reported.听 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.听 The SWG want to see improvement
in the quality of reporting so as to facilitate better decision-making
路
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.
SHESC in April agreed that 51福利 should-
路
Continue to defend USS as a predominantly defined
benefit pension.
路
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.听
路
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.
路 Continue
to explore the feasibility and promise of Conditional Indexation (CI),
involving an assessment of its drawbacks as well as its merits.
路
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.听
路
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 -听
路
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.
路
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.听
路
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.
路
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.听 This has been achieved by a number of
branches already and should cover issues such as
路
The need for moderately prudent, evidence-based assumptions
in any future valuation of the scheme
路
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
路
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]