As you are no doubt aware, the College has been notified by the University and College Union (UCU), of the outcome of their ballot in which members voted in favour of taking strike action, or action short of strike. The first day of action will be Thursday 22 February.
The action is in response to proposed changes to the Universities Superannuation Scheme (USS) pensions.
Having heard from and spoken with many of you, I appreciate the strength of feeling in relation to the proposed changes. Many of you have expressed your anger about the proposal to remove the defined benefit threshold, albeit with the desire to re-introduce a level of defined benefit when market conditions allow, and there is concern about the shift in risk that is inherent in the defined contribution model.
UCU and Universities UK (UUK) are the two negotiating parties and, taking on board your feedback, this week I am writing to both to encourage meaningful dialogue and exploration of alternative models for risk sharing, which would provide greater certainty about retirement benefits to USS members than under the proposed arrangements.
The proposed changes retain an 18% employer contribution, which is higher than most other schemes in the public and private sectors, although concerns have been raised as to how much of this will go into funding member benefits and how much will be used to pay off the deficit.
The deficit in the USS is at the heart of the challenge the scheme faces. The proposed changes seek to tackle the deficit, as did the changes made to the USS three years ago. There is disagreement over the scale of the deficit, but where I believe we can all agree, is the need to find a way forward that ensures the best possible pension provision for our staff that is affordable to colleagues and employers and is acceptable to the Pensions Regulator.
In my letter to UCU and UUK, I will also make positive suggestions in relation to the pension scheme calling for:
- exploration of how deficit recovery contributions can be kept as low as possible, so that the greatest possible proportion of employer and employee contributions supports future benefits;
- engagement with all stakeholders on scheme valuation methods;
- a review of options as to how the scheme might allow greater flexibility around the balance between pension contributions and pay, reflecting that changes in our personal and work life may see us wanting to decrease or increase our personal contribution, whilst retaining good pension provision.
I will also be asking, if the proposed arrangements are implemented, that there are strong assurances to members about the conditions and mechanisms that would see the future re-introduction of meaningful defined benefit pension accrual if economic and funding conditions improve, taking advantage of the flexibility of the hybrid model.
Recognising the very limited time available to comply with the formal requirements of the Pensions Regulator’s timetable for settling the pension deficit, I would welcome any opportunity the negotiation parties could find to discuss these issues and reach settlement.
We value the strong community spirit here at Royal Holloway and I appreciate that many of you are conflicted at this time over your feelings about the proposals and your commitment to our students. Royal Holloway recognises union members’ right to industrial action and UCU and the College have a positive working relationship; together we have been able to shape many of our policies and procedures. We aim to maintain this positive working relationship throughout the action.
As you would expect of us, we will make every possible effort to minimise the impact of any action on our students. Our priority during the period of the action is to ensure the delivery of the curriculum and support our students to succeed in the goals they have set themselves.
On Friday 23 February, a representative from Mercers, a global consultancy firm which also provides actuarial and consultancy services to USS, will brief colleagues about the current position in respect of the scheme. Find out more about the event.
If you are a member of USS, I would encourage you to attend, and to take some time to read the information provided by USS; it’s important that you understand what is being proposed as members will be invited to comment on them in a consultation that begins next month. Updates about the strike and the consultation will also be available on our intranet.
Professor Paul Layzell