5. USS pension board two-thirds elected, and a shareholder voting policy for clean, pro-labour investments

The Universities Superannuation Scheme has an expert body of staff who have secured good returns, but has been dragged down by a recent history of bad managers and directors. USS has a board with 4 members appointed by UUK, 3 by UCU, and 5 by the incumbent board. This lack of worker representation, lack of elections is even below the Pensions Act 2004 minimum for one-third member-nominated trustees at most funds. The USS board has been captured by the City and fossil fuels, including a people from JP Morgan, Citibank, Schroders, Rio Tinto, and chair from the coal industry. They’ve overseen predictions of fund “deficits” on the nonsense assumption that there would be 0% asset growth for 30 years, and then they argued pay and security in retirement needed to be cut. They still refuse to divest fossil fuels, or develop an ethical investment strategy, despite losing £450m of our money in Russia. They’ve failed to develop any credible shareholder voting policy to ensure our votes in companies are cast to get 100% clean energy and fair labour rights. The pensions minister could change this with the stroke of a pen, by raising elected or union directors to one-half, and we need to reach the standard recommended in the landmark Goode Report that where members take investment risk (“defined contribution” funds) two-thirds of directors must be chosen by us, not employers or City asset managers.

The solutions

The 5 USS directors now chosen by the incumbent board must be elected by us, and we will apply the same principles to TPS and SAUL. We will do everything to secure a transformation, through bargaining and through legislative reform to uphold good standards for pension governance. When the USS directors announced the cuts to pension benefits, we organised the largest legal crowdfund in UK history to sue the directors personally to reverse the cuts, and divest fossil fuels. We had the overwhelming backing of the UCU National Executive Committee, but the leadership refused to follow. Our legal action shone a torch on the nonsense valuation for every university management to see. Just after we won leave to go to the Court of Appeal, UUK and USS announced they would reverse the cuts they had fought tooth and nail for – what a coincidence! We know that we need to use every tool in the box to defend workers’ rights, and that means collective action, legal action, and clear, rational persuasion to win.

Finally, it is imperative that our money, our worker’s capital, is voted for good, according to our preferences, not the preferences of the City and Wall Street. If you support our platform, we will make sure USS has a credible shareholder voting policy to get to 100% clean energy in generation, transport, and buildings, and uphold labour rights in every company that USS invests in: that means recognise the union, pay fair wage scales, get workers on boards, and uphold equality and security, everywhere. No more zero or low growth investments, and no more apathy in using our £80 billion fund for good. We will protect our pensions by having the most advanced policy in the world for clean energy and labour rights.

How we do it

We will transform USS – and do the same for TPS and SAUL where it’s the same – by:

  • only appointing new UCU directors to USS that commit to a two-thirds elected board, divesting fossil fuels, and a credible shareholder voting policy for 100% clean energy and pro-labour rights,
  • collectively bargaining with UUK for democratic governance reform in the USS articles of association,
  • legal action, and personal responsibility, for USS directors who squander our money and future on toxic fossil fuel investments, and break their fiduciary duty to vote our shares by our preferences,
  • lobbying for legislative change for majority-elected pension directors through Ministerial order under the Pensions Act 2004 section 243.

More reading on the Universities Superannuation Scheme and pension governance:

  • E McGaughey, ‘Pension strike: university staff are getting a ‘Die Quickly’ pension plan. It won’t work.’ (6 March 2018) LSE Politics and Policy Blog
  • International Energy Agency, Imperial College Business School, ‘Clean Energy Investing’ (March 2021) 3 (showing gas, oil and coal investments outperformed in every portfolio over all time scales)
  • L Russell-Jones, ‘Is now the time to divest your pension from fossil fuels?’ (14 October 2023) The Times
  • ‘Your voice in the market: pass through voting solutions’ (November 2023) PIRC (on latest possibilities of shareholder voting)
  • E McGaughey, ‘Holding USS Directors Accountable, and the Start of the End for Foss v Harbottle?’ (18 July 2022) Oxford Business Law Blog (on our court case against USS directors)
  • E McGaughey, A Casebook on Labour Law (Hart 2019) ch 6 (pensions)