Academic Board Paper: USS Pensions Scheme and Accurately Representing the Position of UCL to Universities UK

[passed overwhelmingly by vote at May 2018 AB meeting]


On two recent occasions (2014 and 2017), the Senior Management Team (SMT) of UCL, represented by Phil Harding (Director of Finance) have responded to consultations by the organisation that represents employers, Universities UK (UUK), to the USS pension scheme trustees and Joint Negotiating Committee. These representations convey the view that the university finds increases in costs to pay pensions benefits under the USS scheme to be not affordable, viz Harding states that the "assessment of affordability for UCL" needs the probability of "contributions…rising above 18% to be very low" and "We have confirmed our view that employer contributions cannot rise above 18%" (see Appendix 1).

The communications (and decisions) of the SMT are represented to UUK as the views of the institution (UCL), see bold text in Appendix 1 and 2, vis-a-vis "UCL response", "for UCL", "my institution's position", etc., (membership of UUK is by institution not by Senior Management Team).

However, the SMT has on no occasion sought to consult these representations with "the university" or "the institution", the members of which are defined in Article 2 of UCL's Charter and Statutes:

The Council, the Academic Board, the Honorary Fellows and Honorary Graduates, the Academic Staff and Students of the College and all such other persons as may pursuant to this Our Charter and the Statutes and Regulations of the College become Members of the Body Corporate are hereby constituted and shall for ever hereafter be one Body Corporate and Politic by the name of 'University College London' with perpetual succession and a Common Seal.

More specifically, It has especially failed to consult UCL's Academic Board, which is charged explicitly by statute with advising on decisions affecting the terms and conditions of the academic staff (Statute 7(10)(B) of UCL's Charter and Statutes), and so should be consulted on such decisions:

7(10)         Subject to the provisions of Article 8 of the Charter and to the Statutes and Ordinances of the University, the duties of the Academic Board shall be:                 …                     (B)           To consider and advise the Council upon the conditions and tenure of appointment of Members of the Academic Staff.

SMT, as a committee assisting the Provost, answers to Council and so should seek the advice of bodies that are empowered to advise Council on such matters. The responses made by Phil Harding, for SMT, but represented as those of UCL, were not consulted with Academic Board. In fact, they were not even consulted and approved by UCL's Council. They have also been kept from the staff of the university, and SMT have resisted Freedom of Information (FOI) requests to publicise them (although they have finally been released after pressure was exerted by appealing the FOI responses).

The reasons given by SMT for not making these documents, affecting the terms and conditions of service of academics, available include the following, from a response by UCL officers to the FOI requests:

… it would be likely to set a precedent for the disclosure of similar information in the future. Setting such a precedent would have the effect of potentially censoring and/or limiting UCL's responses to similar future consultations. Indeed it may be likely to stop the University from assisting with such consultations in a full, frank and open manner in future, for risk of disclosure into the public domain under the FOIA.  Furthermore, disclosing the information could delay or otherwise adversely affect the progress of the discussions and such delays would cause harm to the financial interests of the University and those in the sector. Disclosures may, depending on their content, risk worsening employer-employee relations and prolong strike action or frustrate any worthwhile negotiations between the parties.

Response of 27/11/17 to FOI request to disclose 2014 & 2017 documents - see Appendix 1 below, full text available at: https://www.whatdotheyknow.com/request/response_to_the_2017_and_2014_uu_3#incoming-1098832

Even here the above justification implies the views submitted by Phil Harding on USS pensions are those of UCL (the institution/university). Given the above points concerning the consultation of AB - these statements and claims by UCL SMT are inaccurate, conflicting as they do with the Charter and Statutes. They have not been consulted with the correct bodies of UCL as a body politic and by the route laid down in Statutes. If these are the views of UCL's Senior Management Team, and the Academic Board has not been consulted on them, by Article 2 and Statute 7(10)(B), they are not formally the views of the "the University". Their representation as such is therefore inaccurate.

We also note that the Senior Management Team is not a statutory body or member or constituent part of UCL: it does not exist as such in UCL's Charter and Statutes, nor is it constituted in UCL's Regulations For Management, nor do its Terms of Reference, membership, or powers exist laid down formally anywhere, nor does it publish any minutes or formal reports of its activities. As such, it has no constitutional power to act save where it is authorised by other bodies, and those bodies act in line with UCL's Charter and Statues and Regulations for Management.

In light of the above, we ask that a vote of Academic Board be taken on the following motion:

a)    This fact (that the 2014 and 2017 responses to UUK consultations on the USS pensions scheme are not the views of the Institution) is promptly communicated to UUK by UCL's SMT/Phil Harding, and that a report of this communication is returned to the next meeting of Academic Board;

b)    Any future communication with UUK claiming to represent the University on decisions that will directly affect the terms and conditions of service of academic staff must be notified to Academic Board, so as to consult it in advance;

c)     Where no such consultation has taken place, then no view must be returned as the view of the University;

d)    Where the view of SMT differs to that of the Academic Board, any reporting must use the following form of words "This is the view of SMT, not of the university, and SMT is not a formal or statutory committee of the university";

e)    That a document be brought to Academic Board on UCL's proposed position on risk and the USS pensions scheme and that Academic Board be consulted on this document and its advice sought on this matter, so as to establish the view of the University.

Appendix 1: Letter from Phil Harding (UCL Director of Finance) to UUK replying giving "UCL response" to questions about the pension scheme:

From: Harding, Philip
Sent: 17 September 2014 08:18
To: Pensions <pensions@UniversitiesUK.AC.UK>
Cc: Waugh, Nigel <nigel.waugh@ucl.ac.uk>

Subject: USS consultation - UCL response

Dear Tony,

Thank you for the opportunity to comment on the proposals contained in the UUK paper on USS funding and benefits, and also on USS's document, 'An integrated approach to scheme funding', July 2014. We have had the opportunity for discussion on this matter amongst our Senior Management Team and, as you would expect, there is much interest in the future of USS at this critical point in time.

We recognise the scale of challenge facing the scheme and share the desire to ensure that USS remains both attractive for employees as well as sustainable over the longer term. The assessment of affordability for UCL of higher employer contributions to the scheme confirms the need for the probability of them rising above 18% to be very low. Beyond this level, the scale and quality of academic output would undoubtedly be adversely affected and would compromise our ability to fulfil our mission and strategic aims. It is also the unanimous view of our Senior Management Team that we would expect the current round of benefit reform and the review of the investment strategy to result in enduring changes that will avoid the need for further change in the foreseeable future and certainly well beyond the 2017 valuation. We recognise that the need to effectively cap contributions at 18% and to ensure lasting change will result in benefit change on a significant scale and we support UUK and EPF in pursuing this on behalf of USS employers. Indeed if we do not take the necessary steps at this stage then our concern is that we may relinquish our ability to manage the situation and be faced with a much harsher outcome, imposed perhaps by The Pensions Regulator and/or government, that may not be in the interests of either the sector or our employees.

With regard specifically to the proposed benefit reform as set out in section 14 of the UUK paper we have the following comments and questions:

1. We recognise that the ability of UUK to share fully with us the analysis of alternatives that has been undertaken in arriving at the current proposal is constrained due to the nature of the change process. We would nevertheless wish to see more information about the other options considered and how they have been evaluated. This would help in satisfying ourselves, and members of our governing body who will be keenly interested in this subject, that this set of proposals offers the best outcome in terms of managing risk, securing the sustainability of the scheme and retaining an attractive package of benefits for members.

2. The suggested salary threshold of £40,000 for DB benefit appears low in the context of wishing to "maximise the number of scheme members" who fall below this level. For UCL, the proportion of our USS member employees below this threshold is only 46% and we would expect this is a low proportion for many universities, particularly those based in London. It would also be helpful to have a clearer definition of what is included in this salary figure - total earnings vs pensionable earnings, London weighting, etc? Some data on the distribution, and progression, of earnings across this sector would also be helpful.

3. The proposal is a complex one for those not routinely immersed in pensions and will offer challenges in terms of communications, with the scope for misunderstanding. Assistance in this regard will be necessary, including tools to help us develop some relevant worked examples of the impact. There must be a high likelihood of a national trade union dispute and we would expect UCU to present the proposed benefits under USS as being significantly inferior to those enjoyed by academics who are members of the Teachers Pension Scheme. Assistance in responding to these arguments will also be required, highlighting for example, the much higher costs for employees in TPS.

4. We would expect that an equality impact assessment will be carried out on the proposed changes at an appropriate point in the process.

The paper asks (section 24) for a response on certain specific points:

· We support the view that reform that relies solely on career average benefits and re-defining the link between pension entitlement and final salary is unlikely to be sufficient to curtail risk and deliver sustainability. Sharing the evaluation of options that arrived at this conclusion would however be helpful to employers. We have confirmed our view above that employer contributions cannot rise above 18%.

· We also support the proposed hybrid scheme, with the introduction of benefit flexibility and an element of defined contribution based benefits. It is a welcome feature of the proposal that benefit accrual for higher earners will have a greater proportion that is DC based.

· We have commented above on the salary threshold and believe that further information is required to inform our view about the appropriate level. We support the intent that as many employees as possible should fall below the threshold and are inclined to believe it should therefore be higher than £40,000.

I hope this response is helpful. Please contact myself or Nigel if you wish to follow up any points raised.

Best wishes
Phil Harding
Director of Finance and Business Affairs, University College London

Appendix 2:  Phil Harding Response to 2017 Survey of UUK member Universities