Important: USS update message

1. Ballot arrangements – please read carefully:
The Electoral Reform Society (ERS) will administer and scrutinise the ballot on UCU’s behalf. The ballot will open on Friday 16 January and close on Monday 26 January at 12 noon. ERS will deliver the emails on a staggered basis over the first couple of days of the ballot so they will arrive at different times for each member. Anyone who has not received an email from ERS inviting them to vote by close of play on Tuesday 20 January should contact Matt Waddup (mwaddup@ucu.org.uk) to arrange for a replacement ballot code to be sent. There are a very small number of members in this ballot for whom the union does not currently hold a valid email address. These members will be sent a postal ballot paper by ERS. Any ballot related queries should go to Matt at the above email address.

2. What is this ballot about?
Detrimental proposals to change USS benefits were made by Universities UK on behalf of the employers in autumn 2014. The proposals were tabled by the employers in response to a purported worsening of the fund’s deficit as measured by USS, which showed a deficit of £12.3bn. UCU has opposed both these proposals and the methodology used by USS to measure the deficit.

The original proposals UUK circulated for consultation to employers included:

  • the closing of the final salary section of USS
  • indexing the final salary service by CPI rather than final salary from 1 April 2016
  • the move of all members into the current career average scheme based on an accrual rate of 1/80th
  • setting a £40,000 earnings cap above which defined benefit career average benefits will not build up
  • establishing a new defined contribution pot for contributions on salary over the £40,000 earnings cap, the income from which would depend upon investment performance and would not be guaranteed.

Analysis produced for UCU by First Actuarial showed that the proposals would have meant a range of losses in the value of members estimated annual pension benefits of up to 27%.

UCU members voted for industrial action in the form of an assessment and marking boycott and gave the higher education committee a mandate to call action if they felt it could further our objectives. During the ballot, the employers tabled formal proposals to increase the cap to £50,000. The union also tabled counter proposals.

This boycott was suspended in November 2014 when the employers agreed not to press ahead with their proposals, but rather agreed to engage in a series of meetings with the union aimed at discussing each side’s proposals and trying to reach agreement.

These meetings have now concluded and the higher education committee is balloting you for your views on a set of proposals which, if accepted, would form the basis of agreement.

3. What improvements have been made?

  • an improvement in the accrual rate from 1/80th to 1/75th
  • an increase in the earnings cap to £55,000 (above which defined benefit career average benefits will not build up). This means that 100% of salary is now within the defined benefit scheme for more than 75% of USS members, up from 39% of members covered by the originally proposed £40,000 threshold.
  • a guarantee that the employers will maintain an increased contribution (from 16% to 18% of salary) for two further valuations for at least the next five years (to 2020)
  • an agreement with the employers that any improvement in the USS funding position should be used to improve benefits rather than be used by USS for further de-risking
  • an agreement to continue a review of the contested funding methodology adopted by USS.

4. What is the impact upon my estimated annual pension income?
UCU has commissioned a modeller from First Actuarial which will estimate the impact of the latest proposals on your pension once you have inputted some personal variables. The modeller also shows the difference between the latest and the initial proposals. To access this please click http://defenduss.web.ucu.org.uk/whats-my-pension/

5. What is the union’s view of the proposals?
UCU has worked hard to persuade the employers to negotiate properly, and this final position does represent considerable improvement on the opening proposals. The shift in the earnings threshold from £40k to £55k and the improvement of the accrual rate from 1/80th to 1/75th are the two main changes. It should also be noted that the positive accrual rate change represents an improvement on current terms for new entrants to the scheme. The package still includes a defined contribution scheme above the £55,000 cap.

However, it is important to be clear that even under these final proposals many members will still see their estimated annual pension income fall (albeit by less than under the original proposals) and all members will see their pension contributions rise by between 0.5 and 1.5%. There will be the option for members to make an additional contribution of 1% to the defined contribution which will be matched by the employers.

The employers do consider this to be as far as they are prepared to go. If these proposals are not accepted, the employers have stated that they will revert to their preferred option of a 1/80th accrual rate.

Given the constraints imposed by the funding environment, the higher education committee believes that this is the best that can be achieved through negotiation. Further improvement is therefore unlikely without sustained industrial action by members targeted against student assessment.

HEC believes that at this point it is important for members to have a say on the next steps.

6. What are the consequences of my vote?
If a majority of members vote yes to accept the proposals, the union will end the dispute.

If a majority of members vote no, the current boycott of student assessment will continue until such time as there is an improved offer. In the event that institutions then implement punitive deductions from members’ salaries the union will call further industrial action up to indefinite strike action.