An Open Letter to Prof. Dame Nancy Rothwell and Mr Will Spinks
are writing to you as President & Vice-Chancellor and Secretary &
Registrar of The University of Manchester, but also because Will Spinks will be
playing a critical role over the next few months in deciding the future of our
pensions in his capacity as one of Universities UK’s four negotiators on the
Joint Negotiating Committee of the Universities Superannuation Scheme.
As you know, UUK is proposing that the final salary section of USS should be closed, with all members moving into an inferior career average scheme, a £50,000 earnings cap above which defined benefits will not apply, and a new defined contribution pot the income from which would be uncertain as it would depend upon investment performance. If accepted, this “hybrid” scheme will lead to a substantial reduction in pensions and a shift of risk from large institutions to individual members of the scheme.
UCU has balloted its members asking whether or not they are prepared to take industrial action to defend pensions. The answer has been a resounding Yes: 77.8% said they were prepared to take strike action and an even larger majority, 86.7%, said they were prepared to take action short of a strike. We sincerely hope such action, which would be so detrimental to the University and our students, will not be necessary, but the ballot has demonstrated the level of opposition to UUK’s proposals.
Your stated aim for The University of Manchester is for it to become a leading global university. However, if UUK’s proposals are implemented, the University will not have the best pension scheme in Manchester, let alone one that is world-leading. Staff at The University of Manchester will have considerably worse pensions than colleagues at Manchester Metropolitan University and other post-1992 institutions who are on the same salaries but are members of the Teachers' Pension Scheme.
UUK’s radical proposals result from a belief that USS faces a substantial deficit between the value of its assets and ability to pay past and future pensions. However, UCU disputes the assumptions and methodology upon which this valuation is based, and has taken advice from independent actuaries who say the deficit is smaller and less volatile than the USS Trustee Board’s current estimates suggest.
UCU is not alone in having such reservations. THE recently reported that a working party set up by Oxford University has accused UUK of underestimating the scale of pensions cuts members of USS face, stating that examples given by UUK are, to quote, “misleading because they assume no promotion or incremental salary increases”. Meanwhile the Employers’ Pension Forum was forced to remove claims it had made on its website about the sustainability of USS after academics at Warwick and Leeds Universities showed that its claims about life expectancies after retirement were grossly exaggerated.
Obviously, it is extremely difficult to predict the value of invested funds into the distant future. However, at the very least, members of the scheme have a right to know how the valuation is being made and the details of the arguments being put forward by the USS Trustee Board and UCU. Indeed, it is highly likely that there is expertise within the University that would help us all – management and staff – judge the relative merits of the technical arguments being put forward by both sides. Senior management at Oxford, Bristol, Imperial and elsewhere have already made some of this information available to their staff, precisely so they can draw upon local expertise and make informed judgments of the issues, but as yet you have not done so.
We believe that UUK’s proposals are unnecessary and unfair and will have a detrimental impact on the ability of the University to recruit and retain the best staff. We also believe members of USS have a right to know the details of the arguments regarding the triennial valuation, and that we have colleagues in the University who could help resolve these arguments – to everyone’s benefit.
We therefore call upon you to:
· release to staff The University of Manchester's response to the UUK proposals so that we can understand the position of management on these issues;
· release to staff details of the valuation assumptions and methodology used in the triennial valuation of the scheme, so we can draw upon expertise within the University and better understand the relative merits of the technical arguments being put forward by the USS Trustee Board and UCU;
· work with UCU to reach a settlement on the current dispute which is acceptable to all parties;
· state publicly that USS should be reformed so that it offers pensions that are at least as good as those our colleagues in post-1992 universities can expect from the Teachers' Pension Scheme.