The UK’s £82.2bn (€96.7bn) Universities Superannuation Scheme (USS) has said it will ask the High Court to refuse the permission to bring legal action that some members requested.
Earlier this week it came to light that UK university academics had submitted documents to the High Court requesting permission to launch proceedings against the USS trustee, its chief executive officer and board of director as a whole.
Responding, USS said “nothing in the legal papers served on the trustee or otherwise justifies such a step, so we are comfortable that the challenge – whether in respect of the valuation, expenses or investment – has absolutely no merit”.
“In the interests of USS members, the trustee will ask the High Court to refuse permission and thus avoid wasted costs for members and the scheme,” it said.
According to an overview of their case on fundraising site crowdjustice.com, the claimants allege that the timing and methodology of the 2020 valuation is a breach of duty or “at least a misuse of directors’ powers, and failing to take into account relevant considerations of the assets’ recovery”.
They also claim that proposed cuts amount to unlawful discrimination, and that the directors have “driven a super-inflation in asset manager and total operating costs at USS in a way that serves themselves, not the company”.
A fourth claim is that USS not divesting from fossil fuels has caused, and would continue to cause, significant financial detriment and was not in beneficiaries’ interests.
With regard to the first three claims, the heart of the matter is the higher education scheme’s 2020 actuarial valuation, which identified that as of 31 March last year, there was a deficit of £14.9-£17.9bn. This led to proposals for higher pension contributions and a reduction in the rate at which defined benefits will be built up.
The lecturers’ union, University and College Union (UCU), is balloting members on whether to take industrial action, including over employer pension proposals that have been accepted by USS’s joint negotiating committee.
The UCU has written to USS CEO Bill Galvin requesting a pause in the controversial 2020 valuation process, saying that based on legal advice it received it considers USS may have breached its own scheme rules in a way that has “materially impacted the ability of employers and members to negotiate an acceptable outcome”.
Writing in the Financial Times last month, two economics professors at Imperial College, London, said the sides in the debate about USS pensions “seem to be talking about two completely different (funding) realities” and that “[t]he real issue with university pensions is about what level of risks are acceptable”.