USS pension reform: union accuses employers of ‘hollow gestures’

Universities UK invites the University and College Union to participate in tripartite groups to tackle long-term pension reform

Universities have issued a fresh plea to their trade union counterparts to “join them in shaping and overseeing important changes” to the beleaguered Universities Superannuation Scheme (USS) pension fund – but can the sides find the common ground that has hitherto eluded them?

Universities UK (UUK) passed its USS reform proposals at an August meeting of the joint negotiating committee (JNC). The vote rested on the tie-breaking intervention of the JNC independent chair, Judith Fish, who sided with UUK and against the University and College Union (UCU), which called for more time to prepare an alternative.

The UUK reform proposals include a “commitment to hold a thorough governance review, explore alternative scheme designs and take urgent steps to reverse the high employee opt-out rate”.

UUK said today (Wednesday 13 October) that its reform plans were “moving forward at pace” – and called on the union to join three tripartite groups it hopes to establish.

But UCU appeared unmoved by the plea. “Instead of wasting time on ridiculous PR moves like this to undermine our upcoming strike ballot, employers should withdraw their cuts and agree to a new valuation of the scheme,” said union general secretary Jo Grady.

She accused UUK of “hollow gestures” and conducting “reform via press release”. Vice-chancellors could avert industrial action if their representatives “indicate they are sincere about working with UCU and its members [and] immediately withdraw their disgraceful pension cuts,” she said.

UUK hopes to convene a task force with UCU and USS representatives and actuarial advisers to explore conditional indexation, which “could, potentially, offer enhanced benefits and better value for money”.

Conditional indexation would mean that annual increases to pension benefits above a statutory minimum would no longer be guaranteed and instead depend on the performance of investments. UCU has indicated willingness to support conditional indexation – which it calls “conditional benefits” – but with stipulations on governance reform.

With the support of UCU and USS, UUK hopes a separate task force could devise “high-quality, lower-cost pension options” that would allow staff to opt-in for a lower-than-standard rate, currently set at 9.8% of salary.

Both the union and UUK agree the scheme must stem the numbers opting out – which, at present, represents around 20% of staff in participating employers. UUK and UCU hope lower costs may entice younger staff members that may have childcare, mortgage or rental costs to join the scheme and give it long-term stability.

An independent governance review is “long overdue”, UUK told UCU. The vice-chancellors of the universities of Oxford and Cambridge publicly called for a governance review earlier this year. A source close to employer negotiations told University Business it was a condition of employers offering a £1.3 billion covenant to support USS.

There are many issues like these where employers and their staff agree that change is necessary and by working together quicker progress can be made
– UUK spokesperson

UCU claim the statement from UUK “do[es] not reflect the reality of the discussions that have taken place, which is ironic, to say the least”. The union said it would consider conditional indexation but observed that its proponents had offered “no detail” or terms.

The general secretary continued, “there is no need for another review” because two earlier governance reviews – by the joint expert panel (JEP) of UUK, UCU and independent advisors – had “produced clear recommendations” that UUK had not helped implement. She suggested the plea was instead “employers kicking the can down the road, yet again”.

Said Grady: “It’s quite something for employers to now be talking about exploring a high-quality, low-cost option for members.

“This was exactly what UCU negotiators proposed in the union’s own plans, which for the first time in the scheme’s history would have guaranteed benefits for the thousands of low-paid and insecurely employed staff who are currently priced out of joining USS.

“Our members haven’t forgotten that employers spiked these proposals, opting to force through their own cuts instead.”

The largest private pension scheme in the UK has sparked three bouts of industrial action in the HE sector since 2018 – and threatens to plunge campuses into industrial strife once more. UUK represents all 340 USS employers, including many universities, higher education bodies, charities and research institutes.

In a stark warning to the sector today over the USS crisis, the director of the Higher Education Policy Institute (Hepi) cautioned that Treasury policymakers see the sector as unable to resolve “a mess in its own back yard”, which could hamper its chances of a secure funding settlement at the comprehensive spending review later this month.

A spokesperson for UUK said: “We’re creating a better and more inclusive pension scheme which is affordable for early-career staff, exploring how scheme redesign could offer enhanced pension benefits and better value for money for members and employers, and establishing an independent review of scheme governance.

“We expect that the UCU, which represents all scheme members, will want to play a full part in these important discussions and decisions. There are many issues like these where employers and their staff agree that change is necessary and by working together quicker progress can be made.”

Read more: Employers’ pension plan only game in town – UUK

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