USS’s misrepresentation of tPR
Emails to Sir David Eastwood and the other USS trustees
Below are emails I have sent to Sir David Eastwood, chair of the USS trustee, the other trustees, and others in UCU and UUK centrally involved with USS. In the first one, at the bottom of this thread, I alerted the trustee to USS’s misrepresentation of tPR. In the second one, I express astonishment at the incompetence of USS’s reply. In the third one, I draw attention to the FT article revealing that the regulator had alerted USS to their misrepresentation. Finally, in the latest email, immediately below, I pose a number of questions to Sir David.
From: Otsuka,MH
Sent: 15 June 2019 04:32
To: ‘David Eastwood’
Cc: ‘Jane Hutton’; ‘Jo Grady’; ‘Alistair Jarvis’; ‘Vicky Blake’; ‘Harding, Philip’; ‘Sam Marsh’; ‘Josephine Cumbo’; ‘Stuart McLean’; ‘Adam Tickell’; ‘Steve Wharton’; ‘Dave Guppy’; ‘Anton Muscatelli’; ‘Will Spinks’; ‘Stuart Palmer’; ‘Paul Bridge’; ‘Matt Waddup’; ‘Kevin Wesbroom’; ‘John Coulthard’; ‘Hilary Salt’; ‘Derek Benstead’; ‘Christine Haswell’
Subject: RE: On the significance of USS’s misrepresentation of tPR
Dear Sir David,
I am writing as a member of the USS scheme of which you are the chair of the trustee board.
In my email below of 06 March 2019 08:37, addressed to you and the other trustees, I wrote the following:
“I hope you will press your executives to publicly provide swift answers to the following two questions I pose in my blog:
Is this the first you have heard from tPR regarding your misrepresentation of their views about the appropriate level of a scheme’s discount rate, measured as a margin above the gilt yield?
If not, when did tPR inform you of your misrepresentation and why did you not publicly correct the record at that point?”
We now learn, from Josephine Cumbo’s article in Friday’s FT, that:
‘The regulator sent an email that month [of January] to the USS to say that statements by the scheme in the document about the watchdog’s views on discount rates were wrong.
…In its January consultation document, the USS set out its approach to valuing the scheme, including the liabilities, and said the regulator “prefers measuring discount rates relative to gilts”.
But the regulator said in its email to Jeff Rowney, USS head of funding strategy, that this statement by the scheme was “incorrect” as the watchdog had no preferred approach to setting discount rates.
The regulator also took issue with another statement by the USS in the consultation document where the scheme said the discount rate used for a 2017 valuation of the plan — of gilts plus 1.20 per cent — was above the level the watchdog “views as appropriate”.
The regulator said this was “factually incorrect” as it had “not commented specifically” on the level of the discount rate.
… The regulator’s complaint about being misrepresented by the USS came to light after a union-appointed member of the scheme’s trustee board, Prof Jane Hutton, raised concerns with the panel in March.
She highlighted a discrepancy between the regulator’s published position on discount rates and how the watchdog’s views were presented in the USS consultation document.
The regulator’s January email to Mr Rowney was copied to David Eastwood, chair of the USS trustee board and Bill Galvin, group chief executive of the scheme and a former chief executive of the watchdog. But the email was only shared with the entire USS trustee board in May after Prof Hutton sought confirmation from the regulator about its position on discount rates.
In the email, the regulator did not insist that the USS correct the wording in the consultation document, but asked the scheme to “consider doing so”. The document was not altered.’
Some simple and direct questions to you:
1. Why did you not disclose this email, which was clearly of direct relevance to the questions in bold that I posed in my email, and which Jane Hutton also pressed, as soon as these questions were asked?
2. Even if confidentiality prevented you from disclosing this email to a member of the public, why did you not disclose this email to your fellow trustee Jane Hutton and the other trustees, as soon as she pressed these questions?
3. Why did Jane have to seek confirmation from the regulator before the contents of this email were finally disclosed to the trustee board?
4. Will you now do what tPR asked you to “consider doing”: namely, issue a statement in which you spell out those aspects of the January consultation document which tPR regarded as “incorrect” in your representation of their position?
5. Even if you disagree with tPR’s assessment of the correctness of your representation of their views, it would serve the principles of openness and transparency to share tPR’s contrary perspective with members. If you will continue to refuse to do what tPR has asked you to “consider doing”, what interest do you take yourself to be serving in failing to do so?
I hope my union will join me in pressing these questions until they elicit an answer from you.
I also hope employers will join the union in seeking your answers to these questions.
Best,
Mike
From: Otsuka,MH
Sent: 15 June 2019 02:44
To: ‘David Eastwood’; ‘Steve Wharton’; ‘Dave Guppy’; ‘Jane Hutton’; ‘Anton Muscatelli’; ‘Will Spinks’; ‘Stuart Palmer’
Cc: ‘Jo Grady’; ‘Alistair Jarvis’; ‘Matt Waddup’; ‘Renee Prendergast’; ‘Harding, Philip’; ‘Kevin Wesbroom’; ‘John Coulthard’; ‘Hilary Salt’; ‘Derek Benstead’; Sam Marsh; Josephine Cumbo
Subject: RE: On the significance of USS’s misrepresentation of tPR
Dear USS Trustee,
Regarding Josephine Cumbo’s piece in tonight’s FT, regarding USS’s misrepresentation of tPR’s views, I’ve just posted the following thread, which reproduces my two emails to you further below:
https://twitter.com/MikeOtsuka/status/1139689231972892672
This thread ends with the following request:
“Regarding #USS’s misrepresentation of @TPRgovuk’s view on the discount rate, I hope both @ucu & @USSEmployers will press #USS trustee chair David Eastwood for a fuller account of how seriously he took this complaint. 14/14”
Best,
Mike
From: Otsuka,MH
Sent: 06 March 2019 21:46
To: ‘David Eastwood’; ‘Steve Wharton’; ‘Dave Guppy’; ‘Jane Hutton’; ‘Anton Muscatelli’; ‘Will Spinks’; ‘Stuart Palmer’
Cc: ‘Alistair Jarvis’; ‘Matt Waddup’; ‘Renee Prendergast’; ‘Harding, Philip’; ‘Adam Tickell’; ‘Kevin Wesbroom’; ‘John Coulthard’; ‘Hilary Salt’; ‘’Derek Benstead’; ‘Sam Marsh’
Subject: RE: On the significance of USS’s misrepresentation of tPR
Dear USS Trustees,
I hope you’re in agreement with me that USS’s statement in response to my blog on tPR and gilts is simply an embarrassment:
https://twitter.com/MikeOtsuka/status/1103331588815929345
This response somehow manages to surpass the incompetence of Guy Coughlan’s last response to the critique of Test 1 arising from Sam Marsh’s findings, which I discuss here:
It also surpasses the incompetence of USS’s follow up “answer”, in their linked FAQ, to the question “Why isn’t USS prepared to build up a funding surplus, as has been claimed?” Alan Chaplin rightly observes: “Maybe just me but […] that answer belongs to a different question…” (and see also my tweets above and below this one, for my own response to USS’s answer to this FAQ).
Scheme members depend on you, as trustees, to hold your executives to account for such incompetence.
Best,
Mike
From: Otsuka,MH
Sent: 06 March 2019 08:37
To: ‘David Eastwood’; ‘Steve Wharton’; ‘Dave Guppy’; ‘Jane Hutton’; ‘Anton Muscatelli’; ‘Will Spinks’; ‘Stuart Palmer’
Cc: ‘Alistair Jarvis’; ‘Matt Waddup’; ‘Renee Prendergast’; ‘Harding, Philip’; ‘Adam Tickell’; ‘Kevin Wesbroom’; ‘John Coulthard’; ‘Hilary Salt’; ‘’Derek Benstead’; ‘Sam Marsh’; ‘Josephine Cumbo’
Subject: On the significance of USS’s misrepresentation of tPR
Dear USS Trustees,
I have just posted a blog entitled “On the significance of USS’s misrepresentation of tPR: It undermines the integrity of the consultation and USS’s case for an immediate shift to bonds”.
I hope you will press your executives to publicly provide swift answers to the following two questions I pose in my blog:
Is this the first you have heard from tPR regarding your misrepresentation of their views about the appropriate level of a scheme’s discount rate, measured as a margin above the gilt yield?
If not, when did tPR inform you of your misrepresentation and why did you not publicly correct the record at that point?
Best,
Mike
UPDATE: FT correspondent Josephine Cumbo has posted the following screenshot of the relevant passages from the January letter from tPR:
