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‘Everyone, as a member of society, has the right to social security’: this is the universal right to a fair income in old age. Your pension pay, at university, comes from the Universities Superannuation Scheme, and is meant to give you fair retirement savings above the flat level of the state pension (out of your National Insurance contributions). But now, the employers and USS want to cut your pension pay by an average of 25%, and they are forcing another strike, because they’ve failed to do their job.

USS’s trustee directors and managers are meant to take our monthly contributions, invest them prudently on our behalf (in company shares, bonds, gilts, etc) and then save up returns for a good living in old age. Our pension at USS currently has three main features:

  • it guarantees income up to around £60,000 a year. No matter how long you live, you have a secure income: a “Defined Benefit” pension;
  • this guaranteed pension accrues at a rate of 1/75th of salary for each year worked. For example, if you work 40 years, you get 40/75ths of your career average income in retirement;
  • if you earn above £60,000 a year, extra pension contributions above this level go into a lump-sum that you get out (plus investment earnings) on retirement: a “Defined Contribution” element. There is no guaranteed income above £60,000, so it may run out if you live longer than expected.

Instead of this, USS and UUK - including KCL management - want to cut your pension’s guaranteed element from £60,000 to £40,000 (they tried to scrap it completely in 2018), and cut the accrual rate to 1/85th of salary. If you’re younger this hits you more, and if you’re older it means that your pension is more likely to run out after you retire: it's a 25% cut on average, but you can see what it means for you at

In the UK, many guaranteed income or “DB” pensions have been closed, and were turned into mainly or pure lump-sum “DC” schemes since the 1980s. As a result, the UK has one of the lowest average pension provisions in the OECD, replacing just around 30% of people’s average pre-retirement income: OECD, Pensions at a Glance (2017) Table 4.8. Now the trustee directors and managers at USS, and employer lobby group, Universities UK that KCL supports, want to close and cut the guaranteed income part of the defined benefit pension. This caused multi-billion pound strikes in 2018 and 2020, and is causing another major conflict in 2021.

The pretext of the ‘deficit’ prediction and a narrative of needing to cut has three main factors:

  • (1) a supposed ‘valuation’ of pension assets in the Covid-19 stock market crash,
  • (2) a counterfactual prediction of 0.0% asset growth for the next 30 years,
  • (3) a failure to use assets prudently or have a credible investment policy.

This page finally explains (4) what we can do to fix the problems.


(1) The ‘valuation’ and the ‘deficit’

The USS trustee directors and managers have asserted that there is a ‘deficit’ of £14.9 to £17.9 billion in the pension, based on a ‘valuation’ of the USS assets on 30 March 2020. This was the depth of the stock market crash from Covid-19, as the following chart shows.

In 2018, the USS trustees and managers also ‘valued’ the pension, and said there was a deficit, during a slump. A valuation is required around every three years, to check whether a defined benefit pension can pay for everyone’s retirement. It predicts (based on assumptions) how long people are likely to live on average, and how the assets that the fund invests in (company shares, bonds, gilts, etc). When the valuation was carried out, in March 2020, the fund assets were £66.5 billion, but by July 2021, the assets had risen to £87.8 billion – that is £22.3 billion more, and more than covering the previous, predicted 'deficit'.


(2) USS zero growth “assumptions”

Although the assets have risen, USS asserts that this does not matter and there still is a ‘deficit’, because it asserted there would be 0.0% asset growth above Consumer Price Index inflation (i.e. no growth beyond general price rises) from March 2020. Since March 2020, the assets of USS grew by 28% in 15 months above CPI inflation: a figure higher than 0% in 30 years. This is found on page 28 of the USS, Technical provisions consultation (August 2020), as shown in the following screenshot: it is based on a ‘Tending To Strong’ (TTS) covenant, that is, the existing pension contribution and benefits scheme.

The managers of USS have refused to disclose the basis of these assumptions or the modelling (including to USS’s own board as we understand) presumably because they are baseless and unjustifiable.


(3) USS’s failure to use assets prudently

USS and UUK have also proposed to cut the pension, in response to a non-existent deficit, instead of reversing its cost inflation. From the 2008 annual Reports and Accounts to 2020, ‘total operating costs’ of USS rose from £40.6m a year (2008, p.41) to £160m a year (2020, p.69). USS has also continued to invest in fossil fuels, even though coal, oil and gas are the worst performing asset classes every year since 2017, and are causing irreversible climate damage. The USS board has five board-appointed members (unaccountable to anyone else) and they have backgrounds in JP Morgan, Citibank, HSBC and the coal industry. In February 2020, the board members of USS (the "trustee directors") unilaterally changed the USS Ltd constitution so that they could no longer be removed, except by each other - purporting to be unaccountable to either employers or staff. 


(4) How to fix it

There are three simple steps to fix the pension:

  • (1) help us bring legal proceedings against the USS trustee directors and managers for the harm they have caused: we have crowdfunded over £50,000 and have instructed a fantastic legal team to do this;

  • (2) back collective action, including strikes, against all employers that have supported 25% pension pay cuts, based on the baseless assertion that there is a deficit: there is a multi-billion surplus, and we must never accept the falsehoods and gaslighting that this scheme is anything but healthy. We should enhance the pension and use our money for good, not fossil fuels;

  • (3) reform the pension governance, following the recommendations of Prof Sir Roy Goode, Pension Law Reform (1993) Cm 2342 to have two-thirds member-nominated trustees. It’s our money, so we should elect the trustee directors, and replace those who have failed so badly.

It's difficult to identify any clear motive for the conduct of USS trustee directors and managers, or university employers. However City fund managers earn more fees from selling "annuities" to people who have "DC" pensions: an annuity product guarantees an annual income until death, covering the insecurity from closing "DB" pensions. Because the USS trustee directors and managers are dominated by people with careers at JP Morgan, Citibank, HSBC and other asset managers or banks, it is likely that they identify more with this interest group, rather than acting in your interests. It is completely unclear why university employers would back them, rather than academics and staff who do so much to keep higher education going. This makes democratic reform all the more important. 

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