Case update: We settled our case, and won a new beneficiary derivative claim

This email was sent to CrowdJustice donors on 28 July 2023

Dear Friends and Colleagues, 

First of all, we are so grateful once more for your support. This has been the biggest crowdfund in UK history according to CrowdJustice, and we have pushed UUK to announce their reversal of the 2022 pension cuts. We didn’t win in the Court of Appeal, and so on Monday we decided to settle the USS directors’ legal costs. There were solid legal grounds for appealing the decision to the Supreme Court. However, we have achieved most of our aims – getting your pension back and shifting the USS’s climate policy – we couldn’t have done it without you! 

(1) The USS Directors’ Pyrrhic victory

The USS directors have a victory that would make Phyrrus chortle. The judgment itself dismissed our appeal on procedural grounds, but said that a previously untested “beneficiary derivative claim” may be used to sue directors for breach of duty in a pension trust: see paras [78]-[90]. This was an unprecedented announcement. So, there were good grounds for us to appeal, but overall it was better for everyone to settle and help the directors focus on their future. The bottom line is that the USS directors will now know, and should be advised, that if they breach their duties, they can be sued personally – including for damages. If, in future, the directors do breach their duties, we will be in touch!

(2) A recap

To recap the reasons that your help and support have mattered so much are that since bringing the case:

  1. The USS directors have entirely reversed their position for the 2023 valuation.
    • They are now reporting a £7.4bn surplus.
    • They reduced prudence (as we said they should in our 2021 letter), 
    • They allowed for greater mortality (as we said they should in 2021),
    • They have updated asset values and made other changes.
  2. USS could augment members’ benefits to reverse the unnecessary losses they imposed on members between April 2022 and April 2024. 
  3. Future accrual of defined benefits could be restored from April 2024.
  4. The architect of these changes and USS CEO has announced his resignation.

Our litigation, which thousands of university staff and USS members have supported, has likely had a very substantial impact on the directors’ decisions, and is likely to affect their decisions in future. 

(3) Change worth £8000 per member + a potential pay rise

If members’ 2022-2024 benefits are augmented, this could be worth £1.5bn (on average £8000 for each USS member). In the medium term, reversing the April 2022 cuts for future accrual will be worth many billions more. More than this, thousands of UK university staff could now get a pay rise – university accountants are (anecdotally) saying employee contributions could fall from 9.8% to 8%, and employer contributions down from 21.6% to 18% – the level they were at in 2019.

(4) Climate damage 

We have already seen UUK say that it wants USS to commit to examining divestment. We fully expect USS’s position on climate change and fossil fuels to evolve and note that the judgment explicitly points to the possibility of future action against the trust fund being possible – as well as against directors personally for their future conduct.

(5) Governance reform 

This legal action clearly demonstrates how badly the governance of the USS has failed and how little confidence USS members have that the USS directors were acting in their interests. We should not have to raise hundreds of thousands of pounds to hold the directors to account. The USS’s rules need to be changed to allow members a say in how their scheme is run. Universities and UCU urgently need to reform the governance of the scheme so it can begin to recover members’ trust. This legal action is the first step in that process, which needs to start ASAP. 

Once more, we are incredibly grateful for the over 12,000 donations and the amazing support we’ve had from people across the UK. We are also enormously grateful to our outstanding legal team, David Grant KC, Philip Steer, Gus Baker, Meriel Hodgson-Teall, Richard Meeran, Georgia Rycroft and the team at Leigh Day, and also Dr Thomas Da Vieira Costa and Dr Lindsey Pike for their fantastic work in research and communications. This case has been hugely complex, and everyone has handled it brilliantly. 

We would be delighted to meet with UCU branches or other groups to explain the outcome of the hearing and the next steps, which will not, you will be relieved to know, involve asking for more money. 

Best wishes,

Neil and Ewan