HEIs were asked to respond to the Joint Expert Panel's recommendations
The University of York welcomes the efforts of all parties to try to avert further industrial action, and in particular, the important contribution of the JEP in attempting to identify a potential way forward for what is recognised to be a very difficult issue. The University’s Council has carefully considered the recommendations from the Joint Expert Panel (JEP) and welcomes the opportunity offered by Universities UK (UUK) to comment on these recommendations.
Would your institution support the JEP recommendations regarding the 2017 valuation, in overall terms, subject to the acceptance of such a position from USS Trustee (and TPR as appropriate)?
In principle, we would accept the JEP recommendations regarding the 2017 valuation subject to the acceptance of such a position from the USS Trustee (and TPR as appropriate). In accepting the JEP recommendations, we would also want to be assured about a number of other highly relevant issues (see below).
What further information would you need to provide a final view for question 1?
Our response to the consultation is contingent on a number of points, as follows:
- While we recognise that the default position for the Trustee, in the absence of an alternatively agreed solution, is the provision outlined in the Scheme rules (clause 76.4-76.8), we would not support any proposals that would trigger employer or member contributions in excess of those currently being proposed by the JEP.
- We understand that this is the first phase of the JEP programme of work. We could support the JEP proposals, as recommended in Phase 1, in the short-term, i.e. until the conclusion of the next triennial valuation.
- We would assume that any future changes to contributions would be based on the agreed cost-sharing model and not be funded by increases to employer contributions only.
- We would want to understand the impact and risks of any perceived weakening of the employer covenant on this and any future proposals.
- We note that the work of the JEP has clearly been helpful in trying to seek a resolution to this difficult issue and that work looks set to continue; however, it is unclear how this mechanism fits within the recognised governance framework for making changes to the USS scheme (in particular the role of the Joint Negotiating Committee) and we would welcome clarification on how the governance of USS is therefore envisaged to operate going forward.
- We would want to see a serious ongoing commitment from all parties to engage in proposals to put the valuation methodology, and hence the overall scheme, onto a more sustainable basis for the future. We are very concerned about the impact of such uncertainty, for both the institution and our employees (for whom we recognise that pension benefits are a very significant element of the remuneration package) as well as the impact on our students. By their very nature, pension benefits need to be stable and attractive, and it is not in any party’s interest (staff, students, and the wider HE sector) to have periods of significant disruption, as has been recently experienced.
Employers currently pay 18% towards the USS scheme, and the mandate agreed immediately following the ACAS discussions was 19.3%. If the recommendations of the JEP were accepted in full by all parties, the outcome would be that existing benefits - minus the employer match of 1% - could be provided at an indicative employer contribution of 20.1% of salary (with a member contribution of 9.1%).
(a) Would you accept employer contributions at that level?
We would accept the higher employer contributions (to 20.1% of salary) if these increases were part of the agreed cost sharing model and were for a defined period only, until the conclusion of the next triennial valuation.
We are concerned regarding the uncertainty surrounding the emerging USS proposal to hold a further valuation exercise before the next triennial valuation as it is unclear what outcomes or implications for funding may arise from that.
In addition, we note that there is significant uncertainty in the sector at present with regard to factors such as Brexit and the Post 18 Review of Education and Funding. The potential outcomes and risks of such factors, alongside increased employer pension contributions, could have significant implications for University finances both at York and across the sector.
Finally, we would note that given the uncertainties facing the sector it is critical that the proposals adopted by USS offer both certainty and affordability. Further increases to the employer contribution risk placing considerable strain on the university's budget and, potentially, weaken our ability to support our core academic and institutional priorities.
(b) If not, what balance of additional risk, higher contributions and/or benefit change would you prefer to see as an outcome?
Gerard Lemos CMG
Chair of Council