Everyone at USS is motivated by a clear duty to keep members’ valuable pensions funded, so that members – and employers – can save for the future with confidence.
We understand the concerns of USS members, faced with proposals connected with the 2020 actuarial valuation for higher contributions or benefits that will build up more slowly in the future.
We know that not all members agree with the valuation decisions we have taken, as Trustee. We are also aware that the discussions on contributions and benefits at the Joint Negotiating Committee (JNC) – whose members are appointed by University and College Union (UCU) and Universities UK (UUK), with an independent chair – have been difficult.
Most of us who work at USS pay in to the scheme too, so we know the value members place on ‘guaranteed’ pension outcomes and that any reduction in such guarantees is unwelcome.
But those hard decisions have been made balancing the interests of all USS members (pensioners, dependants, members who have left but not yet taken their benefits, and active members), after extensive debate and with the benefit of appropriate expert advice.
Our primary legal duty as Trustee is to protect the benefits promised to USS members. The JNC decides what benefits are provided, and how the contributions required to fund them are shared between members and employers.
Detailed analysis has confirmed that the price of promising a set, inflation-protected income for life in retirement – to be paid no matter what happens to the economy or HE sector in future – is much more expensive than in the past. That is as true for USS as it is for other defined benefit (DB) pension schemes. According to the Pension Protection Fund, 89% of private DB schemes in the UK have closed to new members since 2006.
The JNC’s proposals respond to the challenges presented by long-term economic and demographic trends by slowing the pace at which USS pension promises build up in future. Its proposals put the scheme on a more sustainable footing for the long-term and secure the future of this rare and valuable scheme in a way that is affordable to members and employers.
The Trustee’s conduct of the valuation has been subject to detailed external scrutiny throughout, as set out in our published correspondence with The Pensions Regulator, UUK, and the JNC. Our website sets out very full explanations of the valuation process and the decisions made – in consultation materials and briefing notes, member updates, Q&As, webinars, our annual Report and Accounts, news releases and blogs.
Despite this background, some members have asked the High Court to give permission to bring a legal action against the Trustee, its directors and chief executive. Nothing in the legal papers served on the Trustee or otherwise justifies such a step, so we are comfortable that the challenge – whether in respect of the valuation, expenses or investment – has absolutely no merit.
In the interests of USS members, the Trustee will ask the High Court to refuse permission and thus avoid wasted costs for members and the scheme.