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No 6504

Wednesday 2 May 2018

Vol cxlviii No 28

pp. 533–549


Report of the Council pursuant to Special Ordinance A (i) 7(b) concerning an initiated Grace relating to the University and the Universities Superannuation Scheme

The Council begs leave to report to the University as follows:

1. This Report is made following the Council’s consideration of a Grace initiated pursuant to Special Ordinance A (i) 5, which reads as follows:1

That this Regent House, as the governing body of the University,

(i) notes the importance of adequate pension provision to the University’s recruitment and retention at all levels;

(ii) regards the proposals and assumptions set out by the Universities Superannuation Scheme Trustee in the September 2017 Technical Provisions Consultation, including the draft recovery plan and provision for additional conditional contributions of up to 7% of pensionable pay ‘in extremis’ over 20 years, as an acceptable basis for ensuring the future sustainability of the Scheme;

(iii) accepts the level of risk implied by the Trustee’s proposals and assumptions in its September 2017 valuation; and

(iv) resolves that the University shall continue to offer a competitive Defined Benefit pension scheme as part of a nationally and internationally competitive employment package.

2. The Council, at its meeting on 23 April 2018, considered its position on conflicts of interest in relation to the Universities Superannuation Scheme (USS; see its Notice on p. 535) and determined that all members present could consider this initiated Grace. This Report is therefore being submitted on behalf of the full membership of the Council.

3. The Council has decided, for the technical reasons noted in paragraphs 4–7 below, to withhold authorization of the initiated Grace and is recommending that the Regent House approve its decision. Notwithstanding that decision, the Council acknowledges that the retirement benefits offered by USS, and in particular those offered under a Defined Benefit scheme, are highly valued by USS members within the University, and that those retirement benefits play an important role in attracting academic and professional staff to the University. The Council also acknowledges the strong support indicated by the Grace for maintaining high-value retirement benefits. The Council is therefore proposing a new Grace which reflects the importance it attaches to ensuring that such high-value retirement benefits are retained (see pp. 535 and 540).

4. The Council regards sub-paragraph (iv) of the initiated Grace (were it to take effect) as mandating the University to provide an alternative defined benefit pension scheme to University employees in the event that the Universities Superannuation Scheme (USS) closes its own defined benefit scheme.

5. If the University were to provide such an alternative scheme, the University would automatically be in breach of the Rules of the USS. As a result, the University would be deemed to have withdrawn from the USS. (It is unlikely that the USS Trustee would exercise its discretionary power to grant exemption from the automatic withdrawal provisions.)

6. Automatic withdrawal from the USS would cause the University to become liable to pay its buy-out debt, being its share of liability in relation to the deficit within the USS, calculated on a buy-out basis. The amount of such buy-out debt has not been estimated at the date of this Report but it is expected that it would be substantially more than the actuarial value of the debt. It would therefore have substantial financial consequences for the University.

7. In any event, the Grace (if it were to take effect) would contravene the Statutes and would therefore be invalid and ineffective:

(a)the Grace would be in contravention of Statute A III 5. Under that provision ‘any matter which under Statute, Special Ordinance, or Ordinance shall be regulated or determined by Special Ordinance may only to be so regulated or determined’; and

(b)pursuant to Statute C I 2, the provision of superannuation in respect of University officers (other than a number of specified office-holders) must be determined by Special Ordinance on the recommendation of the competent authorities (i.e. the Council and the General Board). In other words, provision of superannuation for University officers can only be made by Special Ordinance.

8. For the reasons given above, the Council has decided to withhold authorization of the initiated Grace and recommends that the Regent House approves that decision.

1 May 2018

Stephen Toope, Vice-Chancellor

Jennifer Hirst

Susan Oosthuizen

Richard Anthony

Nicholas Holmes

Michael Proctor

R. Charles

Alice Hutchings

John Shakeshaft

Stephen J. Cowley

Darshana Joshi

Sara Weller

Daisy Eyre

Fiona Karet

Mark Wormald

Anthony Freeling

Umang Khandelwal

Jocelyn Wyburd

Nicholas Gay

Mark Lewisohn

David Greenaway

Jeremy Morris