Why UCU should keep its powder dry during the six months of the strike mandate over USS

The six-month mandate over USS that UCU has recently achieved is impressive. For the first time in a national ballot since the successful 14 days of strikes in 2018, over 50% of eligible members voted Yes to going on strike. The mandate will be valuable if it is used wisely. But its best use probably does not involve engagement in industrial action during the next six months.

It is hard to see the point of strikes over USS during these six months which extend through late April. This is because there are no reasonable demands that employers could deliver during that period which it would be worth the cost and sacrifice of strikes to try to extract.

It would not make sense to try to force employers to restore pensions benefits on the basis of the costings of the March 2020 valuation which are now in force. That would be prohibitively expensive.

It would make sense to try to force employers to restore benefits only on the basis of more favourable costings which reflect more current conditions.

But it is USS, rather than employers, which determines the costing of benefits.

Moreover, USS has made clear that they will not revise their costings on the basis of anything less than a new full valuation of the scheme as at 31 March 2023. As Bill Galvin has written in a note that was posted today:

We’ve just published some further analysis, at the JNC’s request, to inform its ongoing discussions around the evolving funding position and what options might be available to it in due course under the 2023 valuation.

This analysis should — as with other recent reports — continue to be viewed, at best, as a broad indication of the direction of travel rather than the destination. We have not given any indication of the prospective outcome of the next valuation — and have been clear, in our recent Q&As, that our monitoring reports should not be seen as an indicator of the likely outcome of an actuarial valuation.

Financial markets have been exceptionally volatile in recent months, which does not provide a solid basis for decision-making. As a result, reliance should not be placed on monitoring figures at any particular date.

The 2023 valuation will allow us to make a robust assessment of the position via a much deeper and comprehensive analysis of long-term assumptions on a variety of factors, overlaid with judgement taken by the Trustee.

Industrial action, which is against employers, will have little effect on USS and will not force them to change the above position.

Not only does the union lack leverage against USS, but it also lacks good grounds to call on USS to change its position.

USS has a strong case, on the merits, for refusing to restore benefits on the basis of something less than a full valuation. It would, for example, be irresponsible of them to restore benefits simply on the basis of their rough and ready monitoring of the financial position of the scheme as in surplus at 30 June 2022.

Given the especially high degree of market volatility and financial uncertainty at present, plus the accusation of cherry picking of any date that is other than 31 March, the union also lacks good grounds to call for an earlier full valuation.

USS is on record as saying that they believe it possible, under an expedited 2023 valuation, to implement JNC-agreed changes based on the costings of such a valuation by 1 April 2024. As Galvin writes in the same note quoted above:

the Trustee Board is supportive of working with stakeholders on the shared goal of an accelerated timetable for the next valuation with an ambition to make any follow-on changes to contributions and/or benefits decided by the Joint Negotiating Committee (JNC) by 1 April 2024.

This is a challenging but achievable timetable if all parties can work constructively together with a focus on early engagement on key inputs and assumptions, and potential outcomes, ahead of the valuation date.

With the possible exception of the raising of the £40k DB/DC salary threshold back to £60k, it will be possible, at that 1 April 2024 date, to retroactively reverse the cuts to 2022–23 and 2023–24 accrual, and fund this out of the surplus that we hope will be recorded at the 31 March 2023 valuation.

It would make the most sense to try to restore as much as possible, for 2022–24 and beyond, on the basis of a more favourable 2023 valuation.

Although it is hard to see the point of industrial action prior to the 2023 valuation, such action might prove necessary to force employers to restore benefits within the costings of the 2023 valuation, once those costings become known in the summer of 2023.

For this, the union would need a renewed six-month mandate to engage in industrial action during the period of induction and teaching in the autumn of 2023.

So long as the union doesn’t squander its current mandate and demoralise and alienate members by engaging in pointless strikes prior to the March 2023 valuation, the impressive ballot result it has recently achieved will have served the useful purpose of demonstrating that a majority of the membership is ready, willing, and able to deliver a UK-wide mandate for industrial action over USS at future dates when such a mandate will be especially valuable.