Image Credit: Photo © Jonathan Billinger (cc-by-sa/2.0)
It has been revealed that the Universities of Oxford and Cambridge collaborated in their responses to the Universities UK 2017 survey on the academics’ pensions.
Universities UK (UUK) ran the survey on the Universities Superannuation Scheme (USS) to review the way academics’ pensions are managed.
One issue arising from the survey, in responses by both Oxford and Cambridge, was the current possibility for financially weaker institutions to rely on stronger ones to pay the pensions of their academics should the initial institution be unable to do so.
In response to the question “Does your institution support the level of risk (i.e. level of reliance being placed on the employer covenant) being proposed by the USS trustee for this valuation?”
Oxford responded: “My institution wants less risk to be taken, acknowledging the implications this might have for benefits and/or costs”
The University added: “[Oxford University] also believes that the level of risk being proposed is not appropriate for all institutions and allowing weaker institutions to rely on the strength of other employers in a manner which makes their pension benefits appear affordable must be addressed.”
The response from Cambridge stated: “The University (and the other financially stronger institutions) continues to lend its balance sheet to the sector, which contains the cost of pension provision for all employers.
“In a competitive market for research and student places the University would be concerned if this appeared to be having an adverse effect on the University’s competitiveness (by allowing competitor universities access to investment financing or reducing their PPF costs in a way that would not be possible on a stand-alone basis).”
A recent article in the Cambridge student newspaper Varsity showed that the University’s pensions working group was asked to “formulate a robust response acting as far as possible with Cambridge Colleges and the University of Oxford to ensure consistency to give weight to the responses”.
This type of collaboration and collusion between the two universities is thought to be common as they both face financial risk in schemes involving work with financially weaker institutions.
In response to the 2017 survey Oxford University also stated: “The University believes that given the diversity of employers participating in the scheme the possibility of sectionalisation needs to be investigated.” Cambridge submitted similar comments, notably commenting that: “[The University] believes there is an opportunity to create a greater range of pension and reward benefits to better appeal to the range of employee needs across the USS membership.”
This suggests the universities are working together to change the structure of the USS, to distinguish between different Higher Education Institutions, reducing the risk felt by more established universities.