Dear Mr Horrocks,
Thank you for your recent comments on OU news regarding the ongoing USS pensions dispute, and the industrial action that UCU are taking in response to the proposed changes.
However, we are profoundly concerned and disappointed with some quite serious inaccuracies in your public position, which puts you at odds with both UCU’s financial assessments of USS, and increasing numbers of sector VC’s who have accepted the current USS valuation is, at best, deeply flawed.
Specifically, you state: “It is clear from existing valuations of the scheme that there is a deficit and some changes have to happen in order that the scheme remains sustainable and that staff benefits are protected and continue to be so.” and further claim that “There is a significant deficit in the USS pension fund which urgently needs to be addressed.”
The above statements are false on two counts:
- The valuations that have produced a significant ‘deficit’ are based on a requirement for self-sufficiency in gilts. This is counterfactual and in turn derives from the premise that the HE sector could cease trading tomorrow leaving USS to meet its obligations from assets alone. This moves beyond prudence and well into fantasy – it implies a level of insecurity in the sector that simply does not exist. The reality is that investments made by USS have performed well, and assets have grown by an average 12% per annum for the last five years to £60bn according to the last annual report.
- We are disappointed by your apparent acceptance of artificially pessimistic valuation methodology and the transfer of risk to individual staff members. We urge you not to embrace such damaging and permanent changes to the pension provision for your hard working staff based on such fundamentally flawed methodology. The UUK stance is deeply worrying, as it displays a lack of understanding of financial issues at a pretty fundamental level, and is even more pessimistic than that of USS. The knock on effect for staff trust in the VCE group to make sound financial decisions for the University in general is likely to be deeply and permanently eroded, if this line continues to be held in the face of the evidence.
- If these changes are made, not only will all the risk for the pension fall entirely on employees in future (making a mockery of the claim that ‘ staff benefits are protected and continue to be so’ - the opposite is true if these changes go ahead), but the change could actually cause the scheme as a whole to fail. If enough current and potential future staff members elect to ‘opt out’ and move to a private scheme - which these changes will make an attractive proposition, for those that can afford it - USS could collapse entirely, endangering the provision for ALL staff.
- Your statement that the lines of communication between UUK and UCU remain open glosses over the fact that UUK walked away from negotiations after imposing the changes that have led to this dispute. We now need meaningful negotiations and a willingness to revisit the decisions that led to this dispute.
We therefore call on you again to abandon this hardline and counterfactual position, and instead join the VC’s of Aberdeen, Strathclyde, Kent, Birkbeck, Goldsmiths, Bangor, Warwick, Loughborough, Newcastle, Glasgow, LSHTM, Sheffield, Essex, Lancaster, Durham, Keele & Surrey and Cambridge in calling for good faith talks to resume as a matter of urgency.
This dispute represents a powerful opportunity for you to demonstrate true leadership on a difficult economic issue, and demonstrate to both your staff and the wider sector that you can be trusted to do the right thing, for both the organisation as a whole, your staff, and, ultimately, students. It is in everybody's best interests that the strike is ended quickly, and good faith negotiations, with realistic evaluations of the funds status, are undertaken.
You have the evidence. You have the power. If you’re serious about rebuilding the trust you will desperately need to have your reform agenda succeed, there would be no better way to demonstrate that commitment.
Open University Branch of UCU Executive Committee