Endorsement of Motion B4 on the exploration of conditional indexation
Had there been time to call on me at today’s UCU’s Special Higher Education Conference, I would have made the following two minute statement in support of Motion B4:
Conditional indexation is not an assault on defined benefit. As our brilliant trade union actuaries have pointed out, it would, in fact, involve a return to successful and traditional practices involving the regulation, cash flow valuation, and investment in growth assets of DB schemes during their heyday from the 1960s to the 1990s — precisely the practices that First Actuarial has been trying to find a way for USS to return to.
Conditional indexation would serve to mitigate the harms inflicted upon DB by a series of catastrophic regulatory changes since 1997, which have sunk DB schemes by anchoring them to a falling gilt yield.
It will be a challenge to make conditional indexation work in the current hostile regulatory environment. Through their work for the Communication Worker’s Union and Royal Mail, our actuaries have extensive experience regarding the feasibility and design of this sort of arrangement. For these reasons, it will be crucial that UCU be allowed to engage our actuaries in the exploration of this option for USS.
We cannot simply wait until UUK tries to drive through yet more cuts by the next valuation deadline, when it will once again be too late to reap any benefits of conditional indexation as a way out of the downward spiral of higher contributions and cuts to benefits.
As the lopsided 42–6 majority vote in favour of exploring conditional indexation at a recent Cambridge branch general meeting indicates, as well as a survey of UCU members at Leeds, there is widespread member support for this. A close-minded refusal to even explore the feasibility and promise of conditional indexation will alienate many members and hamper efforts to get the vote out.
For all these reasons, I urge conference to vote for B4 to try to find a way to return to DB before its downfall in this country.
