Why pushing for No Detriment is now self-defeating

An open letter is now circulating, in which some union members are calling on employers to absorb all of the 3.2% contribution increase that would be required to maintain the DB status quo under the Joint Expert Panel’s proposals.

This would amount to a refusal on the part of the union to do what they are urging USS to do: namely “engage fully and constructively with the JEP’s proposals”.

If UCU refuses to “engage fully and constructively with the JEP’s proposals”, by refusing to accept their 35% share of the 3.2% increase, that will provide UUK with an excuse to refuse to engage as well. And UUK has the following weapon at their disposal:

If UCU pushes for No Detriment, UUK can simply declare an unwillingness to increase their exposure to investment risk and an unwillingness to jointly push for reforms to Test 1 during Phase 2. The upshot is that it will prove impossible to retain the DB status quo, either at the current 18% level of contributions (which won’t be enough), or at a non-temporary higher level (which also won’t be enough, as it will trigger de-risking into a more expensive portfolio).

In other words, it will not be possible to permanently saddle employers with higher DB contributions. They have an escape route.

What No Detriment will therefore turn into is a squabble over how to split a 3-year 3.2% increase in contributions: whether employers shoulder the entire 3.2% for the next three years, before they’re forced to come down again under the current version of Test 1, or whether UCU members should bear a 1.1% increase for three years.

1.1% of salary over three years will quickly get eaten up by pay deductions for strikes. So UCU members could not credibly threaten industrial action to secure No Detriment for three years.

Pushing for No Detriment is therefore self-defeating. It does not make sense in the current circumstances.

Shorter tweeted version of the above post: @UCULeft No Detriment position = everyone should fully & constructively engage w/ JEP proposals except for @UCU. @UniversitiesUK should cooperate w/ us even if we don’t cooperate w/ them. Problem: UUK can escape DB contribution increases in that case.

See here for an earlier blog post in which I make the case for the alternative of full and constructive engagement with the JEP’s proposals.

[UPDATE: See this post and this post for a discussion of further problems with the No Detriment position.]