Attacking pensions to undermine our case against the continued erosion of our pay
Reprinted from Sheffield UCU
Members may have seen the shoddy hatchet job on our USS pension scheme on Newsnight last night, repeated on the BBC website and then Radio 4 this morning, absurdly claiming that student fees might have to go up £1000 to fund the deficit. Yet the USS annual members report on which the story was based (issued two weeks ago) shows that the deficit has in fact sharply fallen over the previous year. It is difficult to avoid the conclusion that the fake ‘revelations’ are timed to undermine support for our strike next week.
So what is the reality?
* The scheme was officially 92% funded in March 2011, 77% funded in March 2012, 77% in March 2013, and 83% funded June 2013. This corresponds to an official deficit of £2.9bn in 2011 rocketing up to £11.5 billion by March 2013 but dropping to £7.9 billion just three months later.
* This incredible volatility gives a clue to the underlying problem with the official figures. Pension schemes are very long term investments and should be judged on that basis whilst the law requires that they are judged on short term criteria. The huge pension fund deficits across the country reported in the 2000’s, including the USS one, are as phoney as the huge surpluses in the 1980’s. USS is in good health based on real world criteria: its income exceeds expenditure on a long term sustainable basis.
* Pensions are simply deferred pay. And the proportion of University sector spending which goes on staff, including pensions, has in fact been in continual decline. It was roughly 65% when fees paid by home students were zero and has gone down to about 55% (54% in Sheffield) now fees are £9,000. If Newsnight really wanted to locate the reason for rocketing student fees they would need to look elsewhere than staff pay and pensions.
* Britain has one of the worst records in Europe in pensioner poverty, corresponding to our lead in inequality. There are 20,000 to 30,000 ‘excess deaths’ of elderly people in winter every year in Britain – dying of cold, hunger and diseases contingent on them. This is the real pensions scandal.
For a cogent explanation of the USS ‘deficits’ please see a letter to the THE from this same scare-story season last year, ‘Accounting tricks and pension deficits’.
Below are press statements from the relevant players in relation to the Newsnight story:
The USS pension fund provides a vital benefit and is highly valued by university staff. The University and College Union (UCU) is strongly committed to ensuring the financial stability of the fund and has worked with university employers in recent years to deliver negotiated changes to help secure the scheme.
Next year’s triennial valuation will be the next stage in this ongoing process and provide a more accurate picture of the scheme’s health. The deficit does fluctuate enormously and that is why March’s valuation will provide a far more accurate picture. For example the scheme’s deficit fell by almost £4bn between March and June this year with the scheme going from 77% funded up to 83% funded. USS is not alone in having to deal with funding issues; similar issues are facing other defined benefit schemes throughout the UK.
A joint funding and benefits group of employer representatives and UCU was established in 2012. The group’s remit includes the need to take account of the funding position of USS and its objective is to secure an attractive, affordable and sustainable scheme for members and employers in the long term. Through this group the process is already under way for discussions between the employers and UCU and they are expected to run up to and beyond the March 2014 triennial valuation.
USS has been entirely transparent about the deficit figures and provides comprehensive estimates to institutions on an annual basis. USS has made changes to both benefits and contribution levels in recent years to deal with historic deficits and will continue to work with employers and members’ representatives to agree a recovery plan which is commensurate with the long-term nature of the scheme. The employers have made it clear there is no suggestion that tuition fees will be increased to provide additional funding for the scheme.
Employers have already taken significant steps to address the fund deficit and will continue to work on long-term solutions to ensure that USS remains sustainable and affordable. The range of challenges facing the fund are not exclusive to USS and impact on all pension schemes. There is no question that tuition fees will be increased to plug the USS funding shortfall.