UUK short consultation on UCU's proposal

15 Feb 2022

This page was updated on Thursday 3 March 2022.

Employers have received a letter from the University and College Union (UCU) General Secretary, Jo Grady, which confirms UCU’s wish for Universities UK (UUK) to consult with employers on the UCU proposal now it has been costed by the USS Trustee.

At the meeting of the USS Joint Negotiating Committee (JNC) on Friday 11 February, UCU representatives provided further details and clarifications on their proposal on USS.

UCU confirmed that their proposal remains as follows:

  1. That UUK call on USS to issue a moderately prudent, evidence-based valuation of the financial health of the scheme as at 31 March 2022, to be issued for consultation in June (at the latest).
  2. That employers agree to provide the same level of covenant support as for their own proposals to facilitate a cost-sharing of current benefits throughout the 2022/23 scheme year, starting 1 April 2022 at 11% member/23.7% employer until 1 October 2022, and 11.8%/25.2% thereafter.
  3. That employers agree to pay a maximum 25.2% and members a maximum of 9.8% from 1 April 2023 so as to secure current benefits or, if not possible, the best achievable as a result of the call on USS to issue a moderately prudent, evidence-based valuation.

The schedule of contributions set out in the UCU proposal of 9 February to the USS JNC (copy below), is the formal and legal aspect of the second part of UCU’s proposal. This represents the formal and legal aspects of concluding the 2020 valuation. However, at the recent meeting of the JNC, UCU representatives wished to confirm that it is their intention that employer contributions be capped at 25.2% of pay from 1 April 2023. 

The UCU representatives felt that their proposal was a significant move on their part from previous positions and would be popular with their members. Their proposal is based on their strongly held belief that the next valuation will be significantly better and enable more flexibility in scheme design, noting that there is little evidence at this stage that this belief will be proven correct.

It remains unclear how this employer contribution cap could be legally and formally achieved – as it would seem highly unlikely that any new 2022 valuation (part 1 of UCU’s proposal) described by them as being ideally moderately prudent, could be concluded in a timely manner to intercept the increases due on 1 April 2023. Under a usual USS valuation timetable (c15 months plus) the increase due in April 2023 in the schedule would almost certainly be guaranteed to apply using this route. The alternative would therefore appear to be for UCU to put forward benefits reforms based upon the 2020 valuation using their proposed contribution rates of 25.2% of pay for employers and 9.8% of pay for members. Again, the legal and guaranteed basis for how this could be achieved remains unclear and we have asked UCU for further information as to how they see this working. Without a legal guarantee, employers would be exposed to the higher contributions set out in the USS Trustee’s contributions schedule for this UCU proposal. 

Employers are reminded that the UCU proposal would also need employers to support the same covenant support measures as in the UUK proposal in addition to the increased contributions.

The further information expected from UCU on their proposal will be shared with employers – and added to this website – as soon as it is received.

In addition, the views of the Pensions Regulator on the UCU proposal are not yet known. We understand that neither the USS Trustee or UCU have had sufficient time to obtain the Pensions Regulator’s views on the UCU Proposal. It is therefore unlikely that employers will have a view from the regulator ahead of the consultation on the UCU proposal closing next Friday.

While information is coming through from UCU in a piecemeal fashion, it is perhaps easiest to consider that in a best-case scenario the UCU proposal is asking for employers to commit to a 25.2% employer contribution from 1 April 2023 (albeit UCU appear to see this as a worst-case scenario based on their belief that the next valuation would be better) – along with the pledging in full of the covenant support measures.

Employers are now formally being asked for their views by Friday 18 February 2022 on whether they are prepared to support the new UCU proposal to conclude the 2020 valuation.

The full consultation materials can be downloaded below.