The outgoing chief executive of the UK’s largest higher education pensions scheme received a bonus of £262,000 in 2022-23, more than double the £108,000 he received last year.
Annual accounts for the Universities Superannuation Scheme (USS) show Bill Galvin, who is standing down from his role after a decade in charge, was also paid £528,000 in salary and benefits, taking his total pay package to £790,000.
Mr Galvin was by far the most highly paid employee at the USS, which now has 212 staff members paid more than £100,000-a-year – an increase of 25 since 2021-22. Carol Young has been appointed the next chief executive and will begin the role in September.
The accounts were published as academics lost a legal case in the Court of Appeal which accused USS directors of “breaching their duties”, in part because operating costs of the scheme rose from £40 million-a-year in 2010 to £160 million in 2020.
The accounts also showed that the defined benefit assets owned by the scheme, invested across public and private markets, decreased in value by £15.9 billion because of a £16.2 billion negative investment return but this was “exceeded by reductions in actuarial liabilities”.
Writing in the report, USS chair Dame Kate Barker says the value of this part of the scheme had fallen “broadly in line with markets” but it had navigated the “crisis” that the pensions sector experienced following then prime minister Liz Truss’ doomed mini budget in September 2022 “very well”.
Mr Galvin writes that the year had seen “quite profound developments geopolitically, economically, and socially that have had material implications for pension provision – but key indicators suggest USS ended the year in a better funding position than has been the case for some time”.
USS recently revealed that its improved financial position should allow it to reduce employer and member contributions, reversing controversial cuts that were enacted in April 2022.
The cuts heralded a long period of industrial action and prompted the legal case brought by Ewan McGaughey, reader in law at King’s College London, and Neil Davies, professor of medical statistics at UCL, which was paid for using a crowdfunding campaign. The academics took their case to the Court of Appeal after losing at the High Court in May 2022.
It claimed that the USS directors had breached their duties by “setting damaging assumptions” for the 2020 valuation, which predicted a large deficit and led to the cuts. The impact on women, young people and minorities was “discriminatory”, it was also claimed, and they said the fund should be doing more to cut its investments in fossil fuels.
In a judgment, the appeal was dismissed on all grounds by judge Sarah Asplin, who wrote: “In all the circumstances, this was a claim which was bound to fail”.
She said that the claims were not “derivative actions” and, if they were, “it seems to me that these claims would have failed for the lack of a prima facie case to the effect that the directors improperly benefitted as a result of their conduct. As I have already pointed out, there was no evidence to this effect at all.”
Dr McGaughey said they felt the action had been dismissed based on “absurd” procedural grounds but they had decided the case would not proceed any further because “we already won the reversal of the pension cuts as we pursued the case, and there’s now a clear precedent pointing to how future claims could be made against the directors”.