Students rallied outside of the Old Schools building, where students staged a five-day occupation in lent protesting pension changesLouis Ashworth

A long-awaited review has identified several issues with the deficit valuation which played a key role in justifying pension reforms for staff at higher education institutions across the country – proposals which sparked strike action earlier this year.

The panel’s report was published this afternoon, claiming that factors in how the valuation was carried out have led to misleadingly “dampened perceptions” of the outlook of the national pensions scheme.

Re-cap: How did the pensions dispute arise?

The pensions dispute arose between the employers’ body UUK and the trade union for higher education employees over UUK’s proposed move from a defined benefits pensions scheme to a defined contributions scheme for incomes under £55,000. The defined benefit schemes provide a guaranteed income upon retirement, whereas the value of defined contribution schemes depend on returns from underlying investments in the stock market, which staff protested as being less financially stable and less lucrative.

Universities UK (UUK), a representative organisation for UK higher education institutions, proposed alterations to staff pensions as a deficit-reducing measure, and have acted as the advocating body for employers in national-level negotiations.

University and Colleges Union (UCU), a higher education union, represented university employees in national negotiations. It was the organising body for this year’s staff strikes.

The pensions reforms proposed were largely justified by UUK as a means of lessening what they estimate to be a £7.5bn deficit in the Universities Superannuation Scheme (USS), the pensions scheme for most staff at pre-1992 universities.

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The review was one of the conditions upon which staff agreed to suspend the strike action in April, two months after the strikes first kicked off.

Explained: What is the JEP?

The Joint Expert Panel (JEP) was formed in April when the UCU agreed to UUK’s proposal to form it, suspending strike action.

The JEP comprises six members – three members appointed by UCU and three by UUK – and an independent chair.

The panel met 11 times between May and September 2018, and heard evidence from the chair, CEO and senior executives of the USS. It also received evidence through email from Scheme members and employers, totalling 55 submissions.

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The panel’s report identified two key issues with the valuation.

It criticised the valuation’s attempts to quantify survey responses when many responses were subjective, and that the ways in which employers’ responses were used to inform their proposals contributed to “strong risk aversion” – this “[appeared] to be inconsistent with many employers’ wishes.”


READ: The Joint Expert Panel’s first report

The report, published today, was welcomed by several members of the employees’ union UCU


They also found that the framing and context of questions asked in the consultation had produced “misleading results”.

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Furthermore, the panel found that employers had insufficient time “to consider and debate thoroughly the issues” before responding to surveys – a point of criticism particularly pertinent in Cambridge, where it was revealed earlier this year that some college bursars responded to the survey without consulting their college governing bodies, amid broader concerns that college bursars coordinated responses to push for a defined contributions scheme.

In February, a leaked email sent from Simon Summers, St Catharine’s college bursar and chair of Cambridge’s intercollegiate pensions sub-committee sent in September, appeared to call for college bursars to respond in favour of the defined contributions scheme.

Explained: What is the UUK’s September 2017 consultation, and why did it spark controversy?

Every three years, the Universities Superannuation Scheme (USS) – a national pension scheme for employees in higher education at pre-1992 universities – carries out a valuation of the employers and employees’ contribution levels to pension schemes. The UUK was consulted on a funding proposal last year, for which it sent out a survey to employers asking whether they thought taking on the maximum level of investment risk inherent in the proposed scheme was appropriate.

The survey question related to employers’ preferred levels of risk was: “Does your institution support the level of risk (i.e. level of reliance being placed on the employer covenant) being proposed by the USS trustee for this valuation?”, where reliance, defined by the USS, refers to the difference between the assets held at a given point in time and those assets required to allow the scheme to be self-sufficient.

Out of the 350 institutions to which surveys were sent out, 116 responded, representing 92% of USS membership. 53% of respondents accepted the level of risk proposed; 42% wanted less risk to be taken, and 5% wanted more risk to be taken.

At least 16 Oxbridge colleges were among the 42% who indicated they wanted less risk to be taken. Only 3 other colleges responded to the survey responding otherwise.

Following the consultation, UUK met with UCU through a Joint Negotiation Committee (JNC), alongside independent chair Sir Andrew Cubie, to discuss the funding proposal. Both UCU and UUK put forth distinct reform proposals, but no joint proposal was tabled. The chair sided with the UUK, triggering UCU strike action.

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Summers wrote: “You will also wish to consider how to achieve a consensus view in your College about the issues facing the Scheme, during Michaelmas Term.”

“A significant landmark in the union’s ongoing campaign to defend members’ pensions”

Amid strike action in March, two Cambridge colleges, King’s and Churchill, came forward about their decision-making procedure for the consultation, where bursars had submitted their responses on behalf of the college without consulting their governing bodies.

In June, Varsity revealed leaked meeting minutes from the University’s finance committee showed finance officials asked one of their sub-committees, Cambridge’s Pensions Working Group, to “formulate a robust response acting as far as possible with Cambridge colleges and University of Oxford to ensure consistency to give weight to the responses.”

Richard Farndale, pensions officer of the UCU’s Cambridge branch, commented on the report: “There now remains the task of persuading the Trustee and tPR to implement and accept the JEP's findings. UCU's interaction with employers is now crucial, since UUK and UCU must agree to share the common cause of limiting the contribution increases.”


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Revealed: How Cambridge attempted to rig the system and steer staff strikes

He added: “We are delighted to see that UCU's strike action is now fully vindicated.

“Above and beyond the findings of the JEP, the process surrounding the USS valuation – including our industrial action this spring – shows that staff need to be equal participants in university governance... We will continue to work towards assuring that our value as experts, researchers, administrative and support staff and teachers are recognized by our employers now and in the future.”

UCU and UUK are set to begin further discussions in the coming weeks. In a statement, the scheme trustee, the Universities Superannuation Scheme (USS), said: “Unless and until an alternative has been agreed, consulted upon, and implemented, cost sharing remains the default process for addressing the regulatory and legal obligations of the 2017 valuation.”

They added: “We have repeatedly expressed the view that the JEP report could provide the basis for UCU and UUK to agree a way forward that could be introduced before the significantly higher phases of cost sharing increases come into effect, and we sincerely hope that comes to pass.”

In a statement, UUK chief executive Alistair Jarvis said the employers’ body would commence consultation with universities on the report’s recommendations next week “to establish which areas highlighted by the panel can be adopted.”

He added: “We look forward to positive discussions with UCU, the USS Trustee and the regulator, so that we can meet our pledge of continuing to offer valuable defined benefits as part of the overall scheme and concluding the 2017 valuation.”

UCU general secretary Sally Hunt said the report is a “significant landmark in [the union’s] ongoing campaign to defend members’ pensions.”

She commented: “’There is no doubt that we have come a long way from this time last year when we faced plans to impose a defined contribution benefit package that would have seen some members lose around £200,000 in retirement.”

  • This article was updated to include a statement from Cambridge UCU’s pensions officer, Richard Farndale, on September 14th

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