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This is a national debate

November 3, 2014

Bury_your_head_in_the_sandSenior managers at Leeds and elsewhere have agreed a mantra to trot out on the current USS dispute. “This is a national issue and we should wait and see what results from negotiations.”

It’s a simple ruse, but not a particularly impressive one. It seems to suggest our university has no agency to influence the discussions and negotiations. They wash their hands of them, as though if blood gets spilled, they have nothing to do with it.

But it simply isn’t true. We’ve seen our University pension officer’s response on behalf of our University to the UUK proposals: fewer than 200 words and a shrugged non-committal “support the general direction” gesture that seems to indicate that either our leaders haven’t bothered reading the detail, or don’t care to. They know they will be advantaged by the outcome even if they don’t get involved in discussing the detail. There has been no working party set up here, like at The University of Oxford. No arrangement to discuss the details in Senate, as elsewhere. Just let it happen.

But it is clearly not true that Universities cannot influence the direction of UUK and the EPF here. The University of Oxford criticised the misleading illustrations of the impact of the proposals, and The University of Warwick made plain that they were concerned about the impact on recruitment of wealthy universities having a poorer pension scheme than the less wealthy universities. Oxford also expresses a concern that the employers contributions are not going up enough and that, in their case, it is likely there will be a net decrease in employer pension contributions. Showing some leadership in this matter, they say that this ‘is neither desirable nor politically possible, and we would like to explore ways in which we can keep our overall institutional contribution steady and preserve better benefits for our own members, and pay our fair share towards reducing the deficit’.

The University of Cambridge has recently entered the fray stating that it is concerned that the calculations of the deficit may have used assumptions that are ‘overly prudent’. The words are well chosen; last year, the Pensions Regulator warned against ‘overly prudent’ assumptions. We might read the application of the most pessimistic calculations of liabilities against the most optimistic calculation of wage increases to be an example of this. Cambridge also express a belief that de-risking should be applied more slowly and be carefully monitored. The University of Essex has also recently added its voice, arguing that the proposals go too far too quickly.

Why does the University of Leeds feel it can’t have a voice in these important matters? Why did our University make no detailed mention of any aspect of the proposals in its response to UUK?

When we asked senior managers at Leeds directly if they agreed with us that our staff should have illustrations that give a clear indication of what the impact of the proposals would be, by including standard career paths and promotion, we got no reply. When we point out that there is a real concern about the impact on recruitment of downgrading the pension, we get no response. When we ask why the University is supporting a policy of de-risking that squeezes the gap between the asset base of the scheme and its liabilities we get responses about the magic alchemy that actuaries do and that mere mortals are not worthy of even trying to understand. When we point out that the mortality assumptions seem actually to be the same as 2011, not increased, they shrug the point off. When we point out that USS investments have grown faster than the FTSE, and have beaten their own set targets since the last deficit, they change the subject.  They point to the increase in their employer contributions from 16% to 18% but conveniently ignore the fact that the proposals are to reduce their contributions over the £50k threshold to 12%. The overall increase in contributions, therefore, is likely not to go much over 17%. They argue that they need to factor in NI contributions, perhaps forgetting that they now pay pensions through salary sacrifice. In other words, other leading Universities seem very much in word and deed to have taken this matter seriously. Here at Leeds, it is smoke and mirrors.

We would like to see real discussion and debate at the University of Leeds, and would like to see the University establish a working party to look properly at the details of the proposals, the historical tendencies that put us where we are, and the consequences of the investments strategy and the relationship between the construction of the ‘recovery plan’ and the Pensions Regulator’s guidelines.

You can download the Cambridge response to the UUK proposals here: usscambridgeuuk
You can download the Oxford response to the UUK proposals here: ussoxforduuk
You can download the Warwick response to the UUK proposals here: usswarwickuuk

You can download the Leeds response to the UUK proposals here: ussleedsuuk

 

 

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