Universities Superannuation Scheme governance review launched

Universities UK has begun the first major independent review into the governance of UK higher education’s largest pension fund since it was established nearly 50 years ago.

A consultation has been opened into the terms, scope and structure of the review, which aims to identify “meaningful and implementable” changes to improve the running of the Universities Superannuation Scheme (USS), which oversees the pensions of 460,000 members.

Employers first agreed to carry out the exercise as part of the controversial 2020 valuation, which preceded a tumultuous period in the sector, with widespread industrial action held in response to cuts in retirement benefits.

“In recent years the USS governance structure, and the USS Trustee and stakeholder bodies that have operated within it, have come under enormous pressure as funding difficulties have emerged and as changes to contributions and benefits have needed to be considered,” the interim chief executive of UUK, Chris Hale, wrote in a letter introducing the consultation.

Mr Hale said that while “governance structures themselves have largely withstood all these challenges”, a review of who makes the decisions and how was “entirely sensible and appropriate” as expectations of employers and members involved in the scheme have “increased substantially” in recent years.

The scheme’s trustee has come under heavy criticism in recent years, especially by the University and College Union, which has said that recent valuations have overestimated the size of the scheme’s estimated budget deficit and led to “unnecessary” cuts. A recent study predicted that, based on the USS’ own data, 71,000 staff under the age of 40 would lose between £100,000 and £200,000 each as a result of the most recent changes.

The timing of the 2020 valuation – held in the midst of the Covid-19 pandemic – was particularly controversial, and UCU branches across the country have been joined by their universities in writing joint statements calling for a new valuation to be held as soon as possible, amid signs of a substantial improvement in the finances of the scheme. The UCU recently announced that fresh ballots on further industrial action over pensions are due to take place later this summer.

Mr Hale said he did not want the consultation to be “a forum to rerun the events of the last few years”, and he has written to the UCU to encourage the union to participate in the process. He defended the scheme as “one of the very best in the private sector”.

“USS is one of the largest workplace pension schemes in the country, yet the scheme’s governance was established in a different era 50 years ago,” a UUK spokesperson said.

“The proposed review group, to be led by an independent chair, can look fully and impartially at the range of governance activities undertaken by the USS trustee and the scheme’s stakeholders, and recommend meaningful and implementable changes to improve the scheme for members and employers alike.”

tom.williams@timeshighereducation.com