We write as members of the Universities Superannuation Scheme who are concerned that negotiations over the future of our pension scheme are based on the projection of a very large deficit based on an actuarial model that has been publicly challenged, if not wholly discredited. We do not intend to rehearse the arguments here, except to note that the model currently used includes mutually contradictory assumptions, “prudence layered on prudence” (to quote Universities UK) and “de-risking” that is required only on winding up. It also premises future asset growth on a “gilts plus” approach that is not required by the regulator. The result is that the various alternative valuations of the scheme range from a surplus of more than £440 million to a deficit of £12.3 billion.
It makes no sense to negotiate a solution to a problem that either does not exist or whose scale cannot be predicted with a credible model that enjoys the consensus support of experts and stakeholders.
Members of the USS, and indeed employers, wish to know that any changes made are justified by evidence and are proportionate. Any perception that there is a rush to make changes on the basis of a discredited valuation would undermine confidence in the USS and invite legal challenges, as well as precipitating an escalating and damaging dispute with the University and College Union.
As time is short, we urgently seek confirmation from the USS board that there will be no attempt to implement changes to USS rules at the next board meeting on 15 January. Any public assurances the USS can make on this matter would be extremely helpful.
USS members may add their name to this petition [here].
Sean Wallis
University College London and UCU national executive committee
Michael Otsuka
member of the Pensions Advisory Group and member of the court of governors, London School of Economics
Andreas Bieler
University of Nottingham, UCU NEC
Vicky Blake
Durham University, UCU NEC
Lesley McGorrigan
University of Leeds; UCU NEC
Alison Sealey
University of Lancaster
Gregory Sorkin
LSE
Jude Howell
LSE
Malcolm Povey
University of Leeds
Ray Bush
University of Leeds
Richard Farndale
University of Cambridge
Simona Iammarino
LSE
Steve Edwards
University of Liverpool
Tim Forsyth
LSE
Alan Brown
University of Liverpool
Andrew Malpuss
UCL
Bob Brecher
University of Brighton
Briony Thomas
University of Leeds
Carlo Morelli
University of Dundee
Chandrasekhar Reddy Anekallu
UCL
Chris Hooley
University of St Andrews
Claudia Baldoli
Newcastle University
Costas Gabrielatos
Lancaster University
Craig Brandist
University of Sheffield
Daragh O’Reilly
University of Sheffield
David Stewart
University of Liverpool
Eleni Michalopoulou
University of Liverpool
Elton Barker
The Open University
Geoff Williams
UCL
Geoffrey Abbott
Newcastle University
Gethyn Lewis
UCL
Helen MacCarthy
University of Hull
Iain McKay
UCL
James Eastwood
Soas, University of London
Jan-Peter Muller
UCL
John Kent
University of Leeds
John Parrington
University of Oxford
Jonathan Rosenhead
LSE
Julie Hearn
Lancaster University
Kate Meagher
LSE
Kevin Doogan
University of Bristol
Kristin Surak
Soas, University of London
Mark O’Brien
University of Liverpool
Martin Fry
UCL
Martin Moloney
Soas, University of London
Mathew Page
UCL
Mike Cushman
LSE
Mike Holmes
University of Glasgow
Nalini Vittal
UCL
Pam Clarke
University of Liverpool
Paul Attinello
Newcastle University
Paul Hubert
University of Kent
Paul Hudson
LSE
Paul Kuin
UCL
Paul Timms
University of Leeds
Peter Fletcher
Keele University
Rachele De Felice
UCL
Rick Saull
Queen Mary University of London
Roger Woodliffe
UCL
Rory Fitzgerald
City University London
Ruth Dar
UCL
Saladin Meckled-Garcia
UCL
Stacy Gillis
Newcastle University
Steffen Hertog
LSE
Sue Blackwell
University of Birmingham
Tarak Barkawi
LSE
Tony Brown
UCL
Tony Sullivan
University of the Arts London
Tony Whelan
LSE
The Conservatives say that they want to get the budget into surplus in future and pay down the national debt. If this is ever achieved and is taken too far, it could have unexpected consequences.
It is the national debt that provides the gilts in which the pensions regulator is pushing defined benefit pension funds such as the USS to put more of their investments. Those gilts also provide a safe haven for those among the increasing numbers of people with defined contribution pensions who do not feel that they have the financial savvy to invest more adventurously, or those who are close to their retirement and cannot afford to take any risk.
It would be good to know what effect a reduction in the national debt would have on the gilts market on which our pensions depend, and what minimum national debt is needed to provide sufficient gilt investments for the country’s private pensions.
Conversely, one wonders if the recent government pressure on pension funds to invest more in gilts despite their current low yields is due to the need to finance the now-increasing public debt. Private pensions and the national debt are not independent of each other – they exist in a perhaps delicate symbiosis that deserves some attention.
Susan Cooper
Professor of experimental physics
University of Oxford
