Ahead of our meeting with USS in October which focussed on communication with members in the DC part of the scheme (who have the choice of an ethical fund for their contributions) we conducted a survey of how information is provided to members about these choices. This could become even more important if the changes to the funds proposed by USS and UUK go ahead in April 2022 as the threshold for entry into the DC scheme will be reduced from £ 59 000 to £ 40 000.
We are of course of the view that USS should divest its whole fund from fossil fuels, weapons and other investments that harm others and we are opposed to the proposed changes to the scheme.
This is the report on our survey:
USS Members Survey 2020 (Maastrict University) showed:
- Strong support amongst respondents for ‘Sustainable’ investment of their pension
- Nearly 50% support sustainable investment even if this affects financial performance
- But over 40% of respondents in DC scheme not aware of the ethical option, and, of those who knew of it, over 40% were not sure whether they were in it
- (And note: ‘Ethical’ fund outperforming default fund for each of past 4 years)
From April 2022, DC contributions threshold changing from £59 k to £40 k, meaning many more members will be in DC scheme
Increase in DC members and lack of awareness of ethical option likely to lead to
- poorer levels of satisfaction with USS
- potential challenges from members who missed investing in such high-performing funds
- missed opportunity to encourage ethical investment
USS’s stated position is that ‘When a member is automatically paying into this section on salary above the threshold, they must select the funds they wish to use as early as possible. USS cannot issue notifications to those whose earnings exceed the threshold because of a pay rise and will place contributions into the default funds if the member does not make an election through their My USS login’ (response by USS to Cardiff’s Pensions Officer).
The annual member’s statement
- is a simple, two-page document, and sent to the home address. So it is probably the only document most USS members review each year.
- On p. 2, it asked: ‘where are your savings invested?’
- And answered: ‘Register or log in to My USS for a breakdown of the funds you’re invested in, and how they relate to your Target Retirement Age’.
- There is nothing else.
- So there is no mention of the ethical funds, and further admin to find out where one’s funds are invested.
We therefore selected ten universities to investigate, asking members in them to
- sample their own university’s webpages to find out what information is presented there about the DC scheme and fund choices
- contact their pension officers and ask if members are informed by them or payroll about fund choices when they cross the DC scheme earnings threshold
- look at the USS webpages and to comment about the presentation of information on the DC scheme fund choices.
Cardiff, Kings College London, Edinburgh, Open University, Leeds, Sussex, Stirling, Oxford, Dundee, Glasgow
Task 1: sample your own university’s webpages to find out what information is presented there about the DC scheme and fund choices
‘There is no information that you can choose the fund for the DC scheme and therefore no information about ethical choices’ (Glasgow)
‘I looked at the university website and could not find any information about DC scheme funds for those in USS’ (Leeds)
‘Nothing – and Sussex is aiming for most sustainable Uni in the world’ (Sussex)
‘There isn’t much (information) – just seems a bunch of links back to the USS website’ (Dundee)
‘No mention at all about the ethical funds – not even links to them – despite us declaring a climate crisis in 2019, and divesting in 2020’ (Cardiff)
Task 2: contact your pension officers and ask if members are informed by them or payroll about fund choices when they cross the DC scheme earnings threshold
‘The University doesn’t know how much of a USS member’s contribution is paid as it simply pays the total member contribution. Therefore members are not notified if the DC threshold is exceeded’ (Open University)
‘Sussex does not contact people when they cross the threshold and includes no information about ethical choices’ (Sussex)
‘We are not allowed to provide any financial advice nor steer members towards any specific investment type’ (KCL)
‘I emailed the pensions officers and they responded: “Fund information is available at WWW.USS.CO.UK.” so didn’t provide any direct information’ (Oxford)
‘I have been told repeatedly that there are no specific ethical fund options with USS, only to look at the USS responsible investment page’ (Leeds)
‘The two pensions officers I corresponded with did not know whether Cardiff contacted members. The chief pensions officer eventually confirmed that Cardiff does not’ (Cardiff)
Task 3: look at the USS webpages and to comment about the presentation of information on the DC scheme fund choices.
‘Ethical pension options were not mentioned on the search listing’ (Leeds)
‘I found the USS guide to investing in the Investment Builder v useful but it could be more obvious’ (Stirling)
‘I’d like to know more about (fund choices) without having to log on (to MyUSS) but on logging on to MyUSS I’m told there are two options for ‘Do it for me’ but not that one of these is an ethical option, and after hours of clicking links … I am left confused about which parts of my pension are invested where. My conclusion is that information is better on the USS site than the university site but still obfuscatory in places’ (Leeds)
‘When I went on the USS website, I found it incredibly difficult to find anything about the Ethical Funds’ (Dundee)
‘Difficult to find out the existence or performance of the ethical funds without logging on to MyUSS, and then it takes persistence and knowing what to look for when I do’ (Cardiff)
‘When I asked the pensions dept whether I could make additional voluntary contributions I was told this wasn’t possible’ (Leeds)
‘…colleagues think pensions are complex and they don’t want to think about it, so they are happy to go for the default (mostly unethical options)’ (Leeds)
‘I hadn’t realised how easy it was to switch funds’ (Stirling)
Actions suggested by USSDivest to USS BEFORE the change in the DC threshold (April 2022)
- USS provides standard information about DC choices, to be placed on university websites
- Training (webinar or similar) for university pension officers (before January 2022, to allow for queries from members before the April deadline), providing information about choices is not providing financial advice
- USS to inform members when they cross threshold and join DC scheme, including information on fund options
- Review of USS website pages to improve clarity and ‘hit rate’ for searches for ‘ethical’ and cognates
- Members’ statements to highlight information about where funds are invested
- A ‘Members’ Briefing’ about the change in DC threshold and fund options
Outcomes (to be measured end of 2022)
- 100% of pension officers and university websites provide clear, correct information about the fact that that DC members can choose funds
- 80% of a random sample of DC members to show they are aware that there are fund choices and know which fund they are in