Employers’ pension plan only game in town – UUK

Scheme members face a 12% rise in contributions in April 2022, followed by a further 17% rise in October 2022, if strikes block reforms, Universities UK has warned.

Can University and College Union (UCU) members be persuaded to vote against national strike action in a ballot later this month or – after 36 days of stoppages over pensions since 2018 – is the result already a foregone conclusion? 

Universities UK, the organisation representing all 340 employers in the scheme, hopes not.

It has devised a contributions calculator that shows staff how much they will pay each month if employer-backed reforms to the Universities Superannuation Scheme (USS) are blocked. 

It hopes that its contributions calculator – perhaps devised in retaliation to a UCU pensions calculator it characterised as one-sided – will demonstrate to staff that maintaining the status quo would be financial agony for them and their employers.

UCU says the UUK-proposed changes would mean a typical lecturer could suffer a 35% cut to their guaranteed retirement benefits. UUK said the figures “only tell[s] part of the story” and warned that doing nothing to reform USS would hit the sector and employees with crippling annual contributions, which would lead to job losses, the destabilisation of universities and less take-home pay.

Increasing contributions to cover the cost of the USS Trustee valuation would see scheme members facing a 12% rise in contributions in April 2022, followed by a further 17% rise in October 2022, UUK say. A lecturer on £40,000 a year would pay an additional £860 in contributions in 2022 – “with contributions set to rise further every six months until 2025”, the organisation added.

Universities and other USS employers collectively face an additional £206 million bill for pensions if plans aren’t implemented. The sector has already levied £1.3 billion as a covenant for the scheme to supports its proposals: employers, UUK say, cannot find more money without cuts to teaching services and staff recruitment

The strike ballot over USS coincides with another on pay and conditions in universities. The union hopes this twin-track approach, which led to 14 days of stoppages at 74 universities in early 2020, will grab headlines – just at the moment vice-chancellors reassure students the sector is ‘back to normal’ after the pandemic.

Ballots for both campaigns will go out to members at 153 higher education providers from Monday 18 October to Thursday 4 November – with results announced on Monday 8 November. A vote of support from a branch would make strike action legal there for the next six months. 

The USS Trustee has published figures showing the UUK proposals – which do not affect historic pension benefits – would reduce the value of pensions on retirement for staff across all salary ranges by around 10-18%. 

In a briefing sent to journalists, UUK said: “The 35% reduction in benefits figure used by UCU is based on a very specific example, which chooses to ignore the valuable Defined Contribution (DC) element of the scheme. UCU acknowledge that if DC benefits are factored into their example the reduction drops to 23%.” 

UCU did not formally publish alternative proposals to the UUK pension plan, but it offered a draft. The union plan lowers the defined benefits threshold to £40,000, much like the UUK plan, and also reduces the annual accrual rate, though not as much, from 1/75 to 1/80. It signalled back in September that industrial action was the “inevitable” conclusion of the disharmony between the two sides.

Professor Julia Buckingham, the vice-chancellor of Brunel University London, said: “The spectre of higher contributions is causing a great deal of worry for university leaders. Staff have worked immensely hard through the extremely challenging conditions forced on us by the Covid-19 pandemic, and it would be an utter travesty if further pension contributions hikes led to more staff not joining the scheme because of the cost, a further exodus of current staff members from the scheme because they cannot afford to pay in more, and mass redundancies as employers have to cut back elsewhere to pay higher pension costs. 

“With so much financial uncertainty currently engulfing universities, and the significant financial pressures last year brought due to loss of commercial income and additional spending to make campuses Covid-secure and move teaching and support online, now is the time to shore up USS by making changes that guarantee good pension benefits without significant additional costs.”

Read more: USS pensions: Oxbridge VCs and UCU presidents agree need for radical pension overhaul 

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