The impact of preserving unaffordable pensions benefits for
university staff would hit the current and next generation of
students hardest, Universities UK warns today.
Universities UK remains at the negotiating table to engage with
University and College Union (UCU) on the long-term
sustainability of the scheme and is continuing to suggest further
talks. If a credible, affordable solution were to be put
forward by the union, employers would want to consider it.
The cost of future pensions has risen by one-third in the last
three years, and the Universities Superannuation Scheme (USS) has
a deficit of £6.1 billion, which by law must be
reduced.
An extra £1 billion pounds a year would be needed to maintain
current pension benefits.
To meet union demands, employers will have to make cuts to
teaching, jobs, and research to move more money into paying
pensions. This would harm the high quality of education students
currently have and future generations and their parents rightly
expect.
Despite year-long negotiations between Universities UK,
representing over 350 employers, and UCU, the union has been
unwilling to move from its one unaffordable proposal at all,
refuses to accept the level of risk facing the scheme and is
quoting future pensions figures without revealing how they’ve
been calculated.
For example, the union continues to claim that members will lose
up to £200,000 in retirement (£10,000 a year), without being
willing or able to demonstrate how they arrived at that figure.
Universities are doing all they possibly can to protect students
on the first day of strike action. Employers are reporting
a mixed impact at
those institutions affected.
A spokesperson for Universities UK said:
“Union leaders need to listen to the concerns of the Pensions
Regulator and USS. Pensions risk is very real. Their
dismissal of the funding challenges is hugely concerning, the
very reason employers and the scheme must act responsibly to
protect pensions and students. We remain at the negotiating
table to engage with UCU on the long-term sustainability of the
scheme and we continue to seek further talks. If a
credible, affordable solution were to be put forward by the
union, employers would want to consider it.
“This industrial action is targeted at students. It will be
young people and the next generation of students who will also
suffer if their education deteriorates because employers are
forced to make cuts to pay more into pensions. Employers are
committed to continuing to pay in 18% to staff pensions for the
next five years, double the private sector average.”
Key facts:
- Universities UK has met UCU over 35 times in the last year to
discuss USS reform. Following an intervention from the Pensions
Regulator, and a strict legal deadline (30 June), both parties
agreed a deadline to agree reform proposals to make the scheme
sustainable. This deadline was extended twice.
- The Joint Negotiating Committee (JNC) – the formal and
legally established forum for deciding changes to USS which
includes joint membership by UCU and Universities UK – reached a
decision on proposed benefit reforms in January. It recommended
the employers' proposed changes to make the scheme secure and
sustainable and ensure that staff pensions remain attractive,
with the independent chair casting a decisive vote.
- A number of misleading claims are being made about
Universities UK's proposal, which are addressed in
this Five Key Questions
document. For example, UCU claims members will lose
up to £200,000 in retirement. However, UCU's figure is
for someone earning over £100,000 in today's terms and without
any indication of the assumed level of investment return, which
is probably the most important assumption in any calculations.
It is true to say that benefits built up in the future will be
lower. UUK commissioned its own modelling from its advisor Aon,
and this work suggests that under the proposals, and including
standard state pension entitlements, current members should
continue to receive retirement incomes equivalent to 80–90% of
those that would, hypothetically, have been received under the
current benefits.
- Pension benefits already built up are protected by law and
cannot be changed retrospectively.
- The USS trustee already takes considerably more risk than
almost all other schemes because the scheme is supported by over
350 strong, and long-standing employers. Unlike most remaining
defined benefit schemes, USS does not enjoy a government
underwrite guarantee.
ENDS
Notes
- USS is one of the largest private pension schemes in the UK
and is the principal scheme for academic and comparable staff in
UK universities and other higher education and research
institutions. Universities UK is representing the views of
more than 350 higher education employers on USS reform proposals.
- USS is governed by a clear set of scheme rules. Any changes
to these rules need to be decided on through the JNC. The JNC
brings together an equal number of representatives from
Universities UK and the University and College Union. The JNC has
an independent chair who oversees discussions between employer
and member representatives, and can choose to cast a deciding
vote if agreement between both parties cannot be reached.
