Cutting through the spin on USS #2

This UoN UCU’s response to UoN’s post about USS – UoN text in black, UCU response in red

Reporting latest developments on USS pension, UoN failed to accurately report what happened at JNC and UCU actions. We take this opportunity to rectify information and put some of the statements reported in context.

The Joint Negotiating Committee (JNC) has decided to progress the employers’ proposal for changes to the USS pension scheme to consultation with scheme members and representative bodies.

The decision means that scheme members could avoid significant increases in their contributions, which the USS Trustee has said it would otherwise be required to implement, going up from the current 9.6% to 18.6% of their salary from as soon as April 2022.

USS argued that to keep benefits unchanged, contribution rates need to increase to somewhere between 42% and 57% (cfr. 26% pre-2018 dispute). This is based on a flawed valuation of the scheme in March 2020 (see below) and essentially is a rip off.

The proposal is backed by university employers increasing their support for the covenant that underpins the scheme by some £1.3 billion per year.

The JNC decision on the UUK proposal was passed by the casting vote of its Chair, on the final day for negotiations on its already extended timetable, after UCU decided not to put its counter proposal to the vote of the committee.

UUK ensured that UCU’s proposals could not be put to the vote by saying they would withdraw commitment to the scheme that USS claimed was necessary to bring the costs down. Essentially, UUK would not pledge covenant support for UCU’s proposals, but only for their own proposals.

If the JNC’s recommendation is formally accepted by the USS Trustee, a 60-day consultation on the proposals will follow with scheme members as required under the scheme rules.

A spokesperson for USS employers said:

“Today’s decision by the USS Joint Negotiating Committee provides a viable and implementable solution to the 2020 valuation. The employers’ proposal sees a significant element of defined benefit retained while preventing unaffordable contribution levels.

The 2020 valuation is deeply flawed. It used data from 31 March 2020, when markets were experiencing maximum impact of the pandemic, wiping billions off the value of USS assets. In addition, the forecasts on investment performance are overly prudent, basically assuming that ‘investments can no longer be relied on to grow in real terms’ (see Sam Marsh’s blog for full details).

Employers briefly challenged the valuation but changed their minds quickly and opted for cutting pensions again – a 21% hit to benefits and ‘no detriment’ to employers – as outlined in the proposals that are now being sent to USS members for consultation.

Valuations are due every three years. The last one was in 2018 and committed employers to an increase in contributions from 21.1% to 23.7%, a small increase that employers are doing all they can to avoid. The next one should have been in 2021 and would have shown a considerable recovery in assets, but employers were not interested.

Easier to implement cuts to pensions than to challenge the 2020 valuation.

“The additional backing offered by employers is unprecedented among UK pension schemes, with the USS Trustee valuing their additional covenant support at around £1.3 billion per year, which has the impact of limiting the benefit reforms needed.

“The valuation methodology adopted by the USS Trustee and the position of The Pensions Regulator meant that no change was not an option. The employers’ proposal for reforms is an alternative to the USS Trustee’s proposed unaffordable contribution rates for scheme members and employers, which would have caused considerable disruption for members and risks forcing more people to leave the scheme.

The valuation methodology adopted is the crux of the problem. It needs reform urgently, otherwise we will be in the same situation again in 2023.

“In partnership with the University and College Union (UCU), we look forward to progressing a major governance review of USS, jointly exploring future options for scheme design including Conditional Indexation, and shaping a lower-cost option so staff on lower salaries are no longer priced out of retirement saving.”

This could have been initiated already by engaging with UCU proposals instead of not providing covenant support.

USS Employers has published detailed FAQs about the employers’ proposal and challenged some of the assertions in recent UCU statements. You can read these alongside further background information on the University’s USS 2020 Valuation webpages.

The employers’ proposal for changes to the scheme, required to meet its 2020 triennial valuation, includes:

  • minimising increases in contributions to the scheme by members to no more than 0.2%, and employer contributions to 0.3%, meaning that members’ contributions would only rise from 9.6% to no more than 9.8% of salary.
  • maintaining the scheme’s Defined Benefit /Defined Contribution hybrid model with Defined Benefit applying up to a salary threshold of £40,000, and retaining Defined Contributions at an overall 20% of salary above that threshold.
  • employers to offer further, stronger covenant support measures including a moratorium on exit, debt-monitoring and ensuring that pension promises are even more secure through protecting the USS Trustee’s status as a creditor.
  • a commitment that should the scheme’s financial situation get better then improvements to benefits can be considered rather than reducing contribution rates.
  • addressing the high opt-out rate, which sees around 20% of members choosing not to join the scheme and losing out on the 21.1% employer contribution, by giving eligible members the choice of a new lower contribution option.
  • a major new review of the scheme’s governance, and exploring moves to a conditional indexation model, which pegs a part of annual pension provision to the performance of scheme funds, via a working group of members’ representatives, employers, and USS.

While the reform package passed by the JNC proposes a particular set of changes to the future pensions earned from USS’s defined benefit and defined contribution sections, the forthcoming consultation with scheme members could lead to these proposals being amended. Employers remain open to considering alternative benefit structures and formulations, provided they are viable, affordable and implementable.

UCU’s proposal would have been a viable, affordable and implementable short term solution to the 2020 valuation and would have provided a breather during which to consider governance reform, not just review, and future options for scheme design. UUK blocked the road for this to happen by not pledging covenant support.

UUK’s proposals, instead, signify drastic cuts of employees’ pensions:

  • now, your pension grows by 1/75th of salary for every year you work; UUK proposals would cut this to 1/85th – cutting pensions by 12%;
  • now, every pound you earn up to £59,800 adds to the secure defined benefit element of your pension; UUK proposals would cut this threshold to £40,000
  • now, inflation can’t erode the buying power of your pension unless it exceeds 5%; UUK proposals would cut this protection to 2.5%

To see what impact these proposals will have on your pension, visit the modeller provided by UCU here.

Benefits which members have already earned within USS are protected by law and secure, and the employers’ package, and in particular the unprecedented additional covenant support measures provided by employers, further strengthens that protection.

Looking ahead to autumn term 2021-2022. The Delta variant: how to protect staff and students

As we look ahead to the 2021-2022 session, it is clear that the Covid-19 pandemic will still affect our daily lives. The success of the vaccination campaign in the UK notwithstanding, it would be premature to declare the pandemic over. At the moment, there is a lot of discussion about whether government guidelines for Higher Education institutions at the national level are sufficient and about whether the decisions made by Senior Management of The University of Nottingham do enough to keep students and staff safe. One of the key issues here is whether these guidelines and decisions incorporate the latest scientific advice on Covid-19 and, in particular, on the now dominant Delta variant.

The current teaching blueprint at the University of Nottingham seeks to maximise face to face teaching, whilst recommending vaccination, the wearing of face covering indoors and weekly testing. However, these are mere recommendations which means that they cannot be enforced. In addition, staff have been asked to return to campus for face to face teaching.

During a recent interview, UoN UCU member Dr Rudolf Billeter-Clark, Associate Professor of Anatomy, School of Life Sciences (Rudi) has spoken out about his experience of f2f teaching in times of Covid and about what we know about the Delta variant.  Indeed, he has a personal interest in the literature on COVID infections and their prevention. He spent 173 hours teaching Anatomy face to face this past year and is facing a somewhat reduced, but still very high number of hours in the coming year. He concludes that given how much we still do not know about the Delta variant: ‘It all seems to be in flux, many of the reports are quite recent, which probably renders the current Government guidelines (based on data before the newest wave) questionable.’

Regarding insights on the Delta variant, Rudi states: ‘The Delta variant is 2x or more infectious as the variants circulating last Autumn/Winter (CDC 2021a). Proposed mechanisms include higher virus load (Reardon, 2021) and faster cell entry (Callaway, 2021). The Delta variant’s infectivity has been compared to the infectivity of chicken pox, based on the data from Provincetown (USA) outbreak (Dyer, 2021).”

Continuing his summary of the scientific evidence, Rudi remarked: ‘Vaccines reduce the risk of infection by several fold, but not to the extent of preventing a significant number of fully vaccinated people getting infected again (“breakthroughs”, (for example Dyer, 2021; Hetemäki et al, 2021; Elliott et al., 2021). The UK REACT-1 round 13 final report indicates that 1 in 25 fully vaccinated persons with a COVID contact did get infected (Elliott et al, 2021).’

Rudi continued, stating ‘Vaccination strongly reduces the number of people getting severe COVID and requiring hospitalisation, the number of double vaccinated people who died and did not have underlying medical problems seems to be very small. But the risk is not zero.’

 As with the variants of previous waves, age seems to be a risk factor. A recent CDC report on breakthrough infections had 74% of hospitalised people being over 65 years.  ((CDC 2021b) This is a concern for those teaching anatomy because several of the people involved are 65 or older, some by quite a margin. Ethnic background seems also to be associated with higher risk of breakthrough (Elliot et al., 2021).

Relative to the risk of death and hospitalization, the risk of Long Covid has not been front and centre in devising policy, given that there does not seem to be enough data yet to make a judgement on long covid and breakthrough infections (Parker-Pope, 2021).

Indeed, a recently published modelling study, based on data from the University of Bristol (Brooks-Pollock et al.,2021), predicts an increasing number of infections during the forthcoming academic year, peaking at several thousand infected students in early to mid-winter, despite vaccination. Modelled measures to combat the spread reduce the infections to a variable extent. If several measures are combined, the reduction is more marked. Measures modelled included reducing student-student and student-teacher contacts, face masks and regular testing. The modelling indicates that we will likely have an increasing number of students infected during the Autumn term—a number that may well reach a four digit figure by Christmas, and possibly even more in the Winter, with many asymptomatic carriers spreading the virus to colleagues, staff and into the community.

Thus, while our University’s recommendations regarding vaccinations, wearing masks indoors and weekly testing will likely reduce infections, they will not do so dramatically, given the recent observations of relatively similar infectivity from Delta between vaccinated and unvaccinated breakthrough infections (Elliott, 2021).

We will likely experience disruption to teaching due to a considerable number of students and staff having to isolate after positive tests, and we can only hope that there will be no serious cases among them. There is a good chance that the isolating students will call for better on-line resources than we have, which we may not be able to provide at short notice.

Moreover, Rudi commented that the unintended behavioural effects of current procedures will be increased by the ‘risk of infected students not isolating. Their experience with isolation last year was not good, and many might see little benefit from sitting in their rooms for days on end if their symptoms are mild. Or they might abandon testing altogether until the period before the Christmas break when they need a negative test to go home.’

Asked what precautionary measures Rudi would advocate, he listed the following:

  • ‘Better PPE against aerosols [Editor: particles, for instance of the virus, floating in the air for some duration of time]. It is now established that the vast majority of infections occur via this route. Students and staff should wear Visors and FFP2 or FFP3 masks during face to face teaching, 1m+ distancing should be followed.’
  • ‘Good ventilation in the rooms where face to face teaching is taking place. Monitoring of virus load in the air of face to face teaching spaces (Stern et al., 2021).’
  • ‘Check the antibody status of face to face teaching staff (and, if manageable, students), ideally for virus blocking antibodies (Mallapaty, 2021). If someone’s titre [Editor: refers to the concentration of antibodies against Covid-19 as measured in a standard test procedure] is low, enable a booster shot.’
  • ‘Ensure that students test weekly, and positive students do isolate, with a support network that makes isolation bearable.’
  • ‘Monitor virus load in the wastewater of buildings with face-to-face teaching activity, to get an idea of the amount of circulating virus. This could be important in case a significant number of students chooses to abstain from regular testing.’
  • ‘Realistic contingency plans for those who have to step in for isolating staff. They [Editor: UoN management] have to take into account the workload as well as the background of the individuals affected, to prevent enhanced risk of serious COVID due to immune suppression as a consequence of exhaustion. This includes finding a way to protect those members of staff who have to step in at short notice from the fallout of negative student feedback.’

The branch committee is grateful to Rudi for compiling this evidence for us and allowing us to turn this into a website news item. We will continue to compile evidence and inform members so they can be as fully informed as possible. If you have any relevant expertise or knowledge and would like to contribute, please reach out to us at uonucubranch@gmail.com or via your local rep.

For more information on the UCU response to Covid-19, please see https://www.ucu.org.uk/article/11665/Reopening-plans-put-students-education–health-at-risk and https://www.ucu.org.uk/covid19.

Edited by: Gertjan Lucas, Equality Officer & Lopa Leach, Branch Secretary

References:

Brooks-Pollock E., et al. (2021) ‘High COVID-19 transmission potential associated with re-opening universities can be mitigated with layered interventions’, Nature Communications, 12: 5017. https://doi.org/10.1038/s41467-021-25169-3

Callaway, E. (2021) ‘The mutation that helps Delta spread like wildfire’, Nature 596, 472-473. https://doi-org.nottingham.idm.oclc.org/10.1038/d41586-021-02275-2

CDC (2021a) ‘Delta Variant: What We Know About the Science’, available at https://www.cdc.gov/coronavirus/2019-ncov/variants/delta-variant.html

CDC (2021b) ‘COVID-19 Vaccine Breakthrough Case Investigation and Reporting’, available at https://www.cdc.gov/vaccines/covid-19/health-departments/breakthrough-cases.html

Dyer, Owen (2021) ‘ Covid-19: Delta infections threaten herd immunity vaccine strategy’, British Medical Journal, 374: n1933. http://dx.doi.org/10.1136/bmj.n1933.

Elliott, Paul, Haw, David, Wang, Haowei, et al. (2021) ‘REACT-1 round 13 final report: exponential growth, high prevalence of SARS-CoV-2 and vaccine effectiveness associated with Delta variant in England during May to July 2021’, Preprint medRxiv 2021.07.08.21260185; doi: https://doi.org/10.1101/2021.07.08.21260185.

Hetemäki, Iivo, Kääriäinen, Sohvi, Alho, Pirjo, Mikkola, Janne, Savolainen-Kopra, Carita, Ikonen, Niina, Nohynek, Hanna, and Lyytikäinen, Outi (2021) ‘An outbreak caused by the SARS-CoV-2 Delta variant (B.1.617.2) in a secondary care hospital in Finland, May 2021’, Euro Surveillance, 26(30): pii=2100636. https://doi.org/10.2807/1560-7917.ES.2021.26.30.2100636.

Mallapaty, Smriti (2021) ‘A blood marker predicts who gets ‘breakthrough’ COVID’, Nature, https://doi-org.ezproxy.nottingham.ac.uk/10.1038/d41586-021-02096-3

Parker-Pope, Tara (2021) ‘Explained: Can the vaccinated develop long Covid after a breakthrough infection?’ New York Times, available at https://indianexpress.com/article/explained/vaccination-breakthrough-infection-covid-long-explained-7457431/.

Reardon S. (2021) ‘How the Delta variant achieves its ultrafast spread’, Nature, available at https://doi-org.nottingham.idm.oclc.org/10.1038/d41586-021-01986-w

Stern et al. (2021) ‘Characterization of hospital airborne SARS-CoV-2’, Respiratory Resesearch 22: 73. https://doi.org/10.1186/s12931-021-01637-8

Cutting through the spin on USS

Reporting a Russell Group statement of principles for the USS pension scheme (5 July 2021), UoN management referred to:

… UUK alternative proposals to maintain USS as a hybrid Defined Benefit/Defined Contributions scheme with no increases in contributions to the scheme by members, backed up by employers offering further, stronger covenant support measures.

Is this the whole truth? No.

It’s spin.  “Maintain USS … with no increases in contributions … by members” fails to point out that the UUK proposals will lead to a much worse scheme for members.

This is how UUK, supported by management at the University of Nottingham, wants to cut your pension:

  • now, your pension grows by 1/75th of salary for every year you work; UUK proposals would cut this to 1/85th – cutting pensions by 12%
  • now, every pound you earn up to £59,800 adds to the secure defined benefit element of your pension; UUK proposals would cut this threshold to £40,000
  •  now, inflation can’t erode the buying power of your pension unless it exceeds 5%; UUK proposals would cut this protection to 2.5%

To see what impact these proposals will have on your pension, visit the modeller provided by UCU here.

UUK represents the interests of employers in USS negotiations. UCU represents the interests of everyone who is eligible to join USS. UCU opposes these damaging UUK proposals.

UCU Committee message to management on 19 May 2021 re USS:

Dear Vice Chancellor, Chair of Council, Deputy Vice Chancellor and Registrar, 

I am writing on behalf of the local UCU committee to express our grave concern about UoN management’s shift away from questioning USS’s valuation method toward accepting the most recent UUK proposals. We note that, if implemented, the UUK proposals would imply significant cuts to our members’ pensions including the following:  

  1. DB (defined benefits) salary threshold reduced to £40k. Currently we receive DB for income up to about ~£60k. This would bring all but the lowest paid members into the Defined Contribution (DC) scheme, significantly reducing benefits, and constitutes a step in bringing back the DC scheme that industrial action threw out in 2018.
      
  2. Accrual rate reduced to 1/85 (from the current 1/75) cutting the value of future pension by 12%.
      
  3. Reduction in inflation proofing to 2.5%. Currently it is up to 10%. Inflation has been high in the past and could increase again. If inflation does increase, our pensions could be very quickly reduced to only a fraction of their current value. 
Continue reading “UCU Committee message to management on 19 May 2021 re USS:”

Transparent, participatory financial decision-making? Not at the University of Nottingham!

Following up on our Alternative Financial Strategy, UoN’s UCU committee has approached management to share its new, updated Medium Term Financial Plan (MTFP) with us. This is the document that sets out the University’s financial plans for the medium term, the current plan covers the period until 2025. The MTFP is a tool to implement the University’s Strategy. Management has, however, refused to share the MTFP. We have been told that it would be made available only after it has been approved by the University’s Finance Committee and Council in the summer. That is, the union can only see the Plan after it has been decided and therefore not open to revision or amendment.

Continue reading “Transparent, participatory financial decision-making? Not at the University of Nottingham!”