USS

Following the decision of the conference of pre-1992 branches/LAs on 31 January, industrial action in relation to the USS dispute has been suspended, in order to facilitate talks with the employers.

Summary report on UCU (two-way) briefing on USS negotiations, Edinburgh, 4 December 2012

Current funding position

  • As of March 2012, USS was 77% funded
  • As of September 2012, USS was 81% funded, but the financial situation remains volatile
  • The value of fund investments has increased each year since 2009 (see annual report)
  • USS is being hit by historically low UK Government gilt yields of 0%

The divide between CRB/CARE and Final Salary (FS) sections

  • 13% of all active members in USS institutions are in CRB (Career Revalued Benefits)/CARE (Career Average Revalued Earnings) section
  • Although CRB/CARE section has only been going for a short while, there has been no noticeable increase in opt-out rates compared to previous years (FS section)
  • University of Aberdeen now has 196 colleagues enrolled in CHB/CARE section
  • CRB /CARE members will be a majority within 4/5 years, at which time the negotiators think that employers will seek to force FS section members into the CRB/CARE section. With a divided, two-tier workforce, there won’t be any solidarity with which to resist this
  • Negotiators do not think that it will be possible to re-open the FS section to new members

Negotiations with employers

  • Negotiators take the view that it was the Government’s TPS settlement (which was more generous than employers had expected) that has led to talks being re-opened
  • Negotiators take the view that the employers may be willing to make the CRB/CARE section broadly equivalent to the Teachers' Pension Scheme (TPS). (TPS contributions are higher)
  • Negotiators take the view that ASOS achieved little, but that its resumption after 2012 Congress caused the employers to walk away from talks that were being conducted in a more favourable economic climate for the scheme
  • No substantive meetings with the employers will take place until January 2013
  • The UCU position going into negotiations has yet to be finalised (hence this meeting)
  • Employers have been informed that substantive progress will be required by the time of UCU Congress in May 2013

Towards a negotiating  position

1    General principles outlined by the negotiators’ representative (Alan Ross)

  • Broad parity with ‘new’ TPS is the most realistic position
  • USS should have 1 section. The consequence of this would be that USS would become a CRB/CARE scheme and FS section members would be moved into it (which will probably happen anyway)
  • All USS members will have to pay more in order to have a CRB/CARE scheme that is comparable to TPS: FS members would have to pay more for broadly the same level of benefits; CRB/CARE members would pay more for a better pension. TPS members already pay more than USS FS section members, but their contributions are stepped so that the lowest paid do not pay >6.4% of earnings into it
  • It is hard to start putting numbers to members because negotiations are not sufficiently advanced to produce the level of detail needed for this to be done
  • Nationalising USS (i.e. merging it into TPS) is risky because: TPS had no assets, it is simply a Government promise to pay; contribution rates are therefore not calculated with any exactitude, so we may end up paying more into it than we would to get equivalent benefits from a CRB/CARE USS
  • Given the current USS funding level, negotiations may have to proceed incrementally

2    Points that the negotiators want UCU members to prioritise

  • Should USS have 1 section? (As noted above their view is that the FS section is unsustainable). The difficulty is that FS section members would have to pay more to ‘stand still’ in terms of pension provision.
  • CRB/CARE accrual rate. ‘New’ TPS rate 1/57; USS CRB/CARE section has 1/80
  • Contribution revaluation rate. ‘New’ TPS uses CPI+1.6%; USS CRB/CARE section uses CPI
  • Inflation cap for pension payments. No cap in ‘new’ TPS; 5% cap, plus half of any increase 5-15%, in CRB/CARE section of USS (CRB/CARE therefore vulnerable to periods of high inflation)
  • Should contribution rates be stepped, as with ‘new’ TPS?
  • Protection of USS’s superior lump sum on retirement (negotiators take the view that it should be possible to retain this)
  • Protection of USS’s superior death in service benefits (negotiators take the view that it should be possible to retain these)
  • Protection from actuarial reduction in pension (ca. 4% pa) in case of redundancy (currently protected and this may be continued for duration of negations)
  • Members at the Bristol briefing suggested that employers should not be allowed to reduce their contribution to USS (16%) while the inflation cap remains in place.

David Watts and Godfrey Brown, 12/12/12