Welcome news from USS regarding restoration of pensions
A pause in industrial action is now warranted
Yesterday, Kate Barker issued a statement reporting that the USS Board of Directors she chairs ‘concluded’ at a meeting last week that ‘the overall contribution rate … that would be required for the pre-1 April 2022 [i.e., uncut] benefit structure, going forward, is unlikely to be in excess of the current cost of future service (which is 25.2%)’. She also states that ‘there is likely to have been a slight increase in the implied cost of future service benefits, and a reduction in the potential surplus, relative to the position at the end of the year’ — i.e., 31 December 2022, on which USS reported favourably in February.
Since Barker speaks of a ‘reduction in the potential surplus’, we can still anticipate a surplus out of which it will be possible to fund recovery of DB benefits lost in 2022–24. Even if the surplus is insufficient to fully fund such recovery, it should be possible to do so out of a modest increase in contributions above a future service cost likely not to exceed 25.2%, while still reducing contributions below the current overall level of 31.4%.
In short, this is a very welcome confirmation of USS’s February statement regarding the likely required cost and feasibility of full restoration of pre-April 2022 benefits.
It’s worth emphasizing, however, that USS will not firm up such language regarding likelihood of contribution rate until they issue their consultation document on the valuation, scheduled for the beginning of July. If the past is a guide, that document itself will firm up only to an ‘indicative’ contribution rate to restore benefit to pre-2022 levels. Such a rate will be subject to formal confirmation by the board after its review of the responses to the employer consultation on the valuation. As USS writes on its timeline: “October 2023: Having considered UUK’s response, we will inform the JNC of the overall contribution rate needed for the [restored] package of benefits.”
Further industrial action over USS during the next six months will not move USS to make the unconditional commitments that the two UCU negotiators affiliated with UCU Left are calling on members to engage in IA to try to secure. See this Twitter thread where I spell out why the unconditional commitments they seek from USS will not be forthcoming prior to 2024.
Although it will come as a relief that the UCU Left negotiators have finally abandoned their previous demand of full restoration and recovery by 1 April 2023 on the basis of post-2020 valuation experience, it’s disappointing (though unsurprising) that they have now settled upon another futile demand.
By contrast, the majority of UCU’s USS negotiators have come to the following conclusion:
the agreements between UCU and UUK now being implemented by USS are sufficient to stand down (or pause) industrial action over USS. We believe there are no further gains to be made at this stage in the USS dispute.
Please click through to the negotiators’ linked briefing, and read the well-judged, well-argued, informative analysis which backs up this conclusion.
