You may remember that last November I devoted the whole of this monthly email to the issue of the dispute over the Universities Superannuation Scheme (USS), which has now progressed to the point of industrial action. I do not propose to repeat what I said there, but if you want to remind yourself it is still available on the UEB blog. As anticipated we are in a very difficult position, and I have every sympathy with members of USS concerned to understand the various complicated factors at play and to debate them. We have already organised briefings by Mercer’s (one of which is available to view here) and will be asking them to return once the USS consultation on the proposed reforms is under way in March. Please do engage with the consultation and attend the briefings if you can.
I have received a number of emails on this and thank all those who have written to me. I recognise the concern around the valuation and I have therefore asked the Deputy Vice-Chancellor, Professor Karen Holford, to invite suggestions for membership of a technical group to analyse the actuarial valuation. It is certainly the case that the 2017 valuation conducted by the USS Trustee was expected to reveal a deficit of more than £5bn. However, the Pensions Regulator questioned the assumptions made by USS about the ability of employers to stand behind the scheme if that valuation proved optimistic, with the result that the final deficit calculation was over £7bn. The job of the Pensions Regulator is to ensure that the scheme is sufficiently well funded to protect the interests of future pensioners, and given the state of the global economy, of actuarial assumptions around longevity, and other factors, it will insist that conservative assumptions are made.
It is the nature of these assumptions that make this dispute so difficult to resolve. It is not like a pay dispute where it might be possible to meet in the middle. If USS is to remain as it is now, delivering the same level of defined benefits, then all members would have to accept a cut of almost 4% in their pay (because their pension contributions would rise), and universities would have to accept a rise in salary costs of over 7%, in our case amounting to more than £10m, which would put us in a seriously precarious financial position. Even after all this expenditure there is a strong possibility that in three years’ time we would find ourselves with the same problem, as happened at the last valuation. Trying to find a half-way house between this prospect and a defined contribution scheme would not address the problem of the scheme deficit. Clearly, a defined contribution scheme, as UUK is proposing, where members build up a pension pot over their career which is invested by the scheme and then pays out when the pension is due, is less attractive than a defined benefit scheme. It means that there is no guarantee that a certain level of pension would be paid in relation to final or career average salary. However, it still allows a good pension to be built up, and does give members the ability to vary the amount of contribution they make to the scheme. While employers would continue to contribute 18% of salary (which is a substantial contribution compared with many sectors), employees would contribute 8% of their salary, although they could reduce that, on a temporary basis if they wished. Or, as now, they could top up by contributing more. It is worth remembering that this would still be a very good scheme by comparison with other sectors, and that all benefits so far accrued would be protected by law.
Having said all that, it is understandable that members of the scheme feel strongly about this issue. It is an extremely unfortunate set of circumstances that UUK and the UCU have been trying and failing to address since 2011. Each three-yearly valuation since that time has been worse than the one before, culminating in a position where in future, funding the existing scheme would require huge expense. We are faced with a stark choice, and while UCU members have every right to take industrial action, in the absence of some unexpected breakthrough it is difficult to see what compromise position could be reached. We have placed more information and resources on the intranet if you are interested.
On a brighter note, it was good to see that members of our Gravitational Waves group attended the Nobel prize ceremony in Stockholm for the world-wide group’s leaders. I have mentioned their ground-breaking work on several occasions but as a colleague has pointed out, I have omitted to say that we have in Cardiff a hugely authoritative expert on the work of the whole gravitational waves project since 1972 in the form of Professor Harry Collins. A sociologist of science, Professor Collins has closely followed the evolution of this project and written several books on the subject including his most recent, entitled Gravity’s Kiss: The Detection of Gravitational Waves, which focuses on the hugely important first detection of gravitational waves in 2015 and was listed as one of the Smithsonian ten best science books of 2017. His approach involved becoming a trusted member of the relevant scientific community and, as far as possible, observing it from the inside with the aim of gaining a better understanding of how science is actually done. Given the size of the group and the longevity of the project this has been a very substantial undertaking, but the result is a fascinating insight that it would be difficult to acquire any other way. There is level of detail on the science that any non-expert interested in gravitational waves would find exceptionally useful, and of course the day-to-day account of science in action, of the production of fundamental knowledge, is invaluable.
Just a few final points: you may have seen that the new Way Forward, covering the period from now until 2023, has been published. I’m not going to go through it all here, but during Speak Week (5-9 February) you can hear from me and from other University Board members and ask questions about this or any other matter. I’m also pleased to report that we have a new Director of the Doctoral Academy: Professor Anwen Williams has taken this role on and has exciting plans for the future. And it was a pleasure to see a number of people associated with Cardiff University being honoured in the New Year Honours List, and for me personally, a particular pleasure to be able to congratulate Professor Karen Holford on her CBE for services to engineering and for the advancement of women in science and engineering. This is a much deserved award, and testament to the extremely important work Karen does in those areas.
With best wishes