JEP boils down to three options for UCU and UUK to negotiate

The logic of swift acceptance of the JEP-modelled solution in the middle

The recommended adjustments to the valuation of the Joint Expert Panel (JEP) give rise to a narrow range of options for the Joint Negotiating Committee (JNC) of union and employers to negotiate. They boil down to three salient choices, which I list from best to worst for scheme members (and worst to best for employers):

#1. No Detriment to scheme members: Preservation of existing DB and DC benefits (minus the 1% DC match), via a 3.2% increase in employer contributions, and no increase in member contributions. This is the option that the UCU Left caucus of the union supports and which at least one branch (UCL UCU) has also endorsed. No Detriment was also supported by many of the 36% who rejected, as opposed to the 64% who accepted, the ballot in April to suspend strikes and set up the JEP.

#2. The JEP-modelled solution: Preservation of existing DB and DC benefits (minus the match), by means of a 2.1% increase in employer and 1.1% increase in member contributions, in line with a cost-sharing formula according to which employers bear 65% and members bear 35% of any increase in contributions needed to preserve existing benefits. JEP does not explicitly endorse this solution. They are careful to note that both the level of benefits and the allocation of contribution increases are outside of their remit. In her Introduction, the Chair of the JEP writes, however, that:

we have made a number of recommendations, the overall effect of which would be to reduce the valuation estimates of the future service cost and deficit to the point where the increase is small enough to allow the Joint Negotiating Committee (JNC) to be able to reach an agreement so that the issues currently facing the Scheme can be resolved, recognising that compromise may be needed on all sides….

We recommend that the JNC and the Trustee come together to work at speed to agree a process that will enable any changes resulting from our recommendations to be implemented early in 2019.

[JEP report, p. 5, my emphasis]

#3. A moderate cut to existing benefits, in order to limit the rise in contributions to the level employers accepted in the 12 March ACAS agreement (i.e., 2% overall rise, split 65:35, +1.3% employer, +0.7% member). This could be achieved, e.g., either via a reduction in existing DB accrual from 1/75 to c. 1/80, or via a reduction in the current DB/DC salary threshold from £57k to c. £45k. UUK has signalled their interest in this approach in their statement that “[a]ny solution is likely to require a combination” of “employers taking on greater levels of risk, stakeholders paying higher contributions, the trustee updating the valuation assumptions and stakeholders agreeing some moderate adjustment to benefits”.

If UCU embraced the JEP-modelled solution (#2), on grounds that this was most consistent with engaging “fully and constructively with the JEP proposals”, it would be difficult for UUK to insist on #3: cutting benefits to hold contributions down to March ACAS levels . If UUK insisted on #3, and this went to casting vote of the independent JNC chair (Andrew Cubie), it would be hard for him to justify siding with UUK in preference to a UCU proposal that fully conforms with JEP’s modelled solution #2, while also providing a reasonable middle ground compromise position. So the most likely resolution would be UUK agreement on the JEP-modelled solution #2 as well, with maximal time for the two sides to come together and push USS to accept this.

If, by contrast, UCU holds out for No Detriment (#1), that would provide cover for UUK to table cuts to benefits to keep contributions down to March ACAS levels (#3). In the unlikely event that Cubie casts his deciding vote for No Detriment, all is well for UCU, assuming that USS also signs on (which cannot be assumed). In the more likely event that Cubie casts his vote for UUK, UCU would then spend a couple months on a strike ballot. The prospects for success of such a ballot would not be high, given that the moderate cuts to benefits necessary to keep contributions down to March ACAS levels would nevertheless yield a better result for members than the best offer that UCU tabled in 2017–18. It seems more likely that UCU members would reluctantly accept UUK’s proposal rather than going on another round of costly strikes, while not welcoming the fact that their union squandered an opportunity to secure the preservation of existing benefits by embracing JEP’s modelled solution.

[Please also see (1) this post and this post in which I offer further reasons to reject No Detriment #1, (2) this post for further discussion of the merits of the JEP-modelled solution #2, and (3) this post in which I argue against any employer call for a cut to DB accrual along lines of #3.]

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Professor, Dept. of Philosophy, Logic & Scientific Method, LSE

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