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February, 2015:

Pension changes

Last week we heard that UCU members had voted to accept the proposed reforms put to them following negotiations with UUK, who put in an improved offer after the ASOS of November 2014.

The offer is far from ideal, notably in its introduction of an element of Defined Contributions for earnings above £55,000. This shifts the risk from the employers to employees.

This brings Higher Education pensions closer towards the schemes that private companies have. But the professionals who work in universities don’t get comparable pay to those in private companies – the pension has always been cited as a benefit that compensates for this. But let’s not forget: the VC said in his first interview with the student newspaper Concrete, he is the ‘CEO’ of a multi-million business. We must therefore be aware that on the horizon in this pensions dispute is the fate of universities as in some way ‘public’ institutions, and we must be vigilant to protect their commitment to the public good in the future. USS reform, like the hike in undergraduate fees, is a glimpse of things to come.

 

This aside, we recognise that there were improvements made to the original proposal as a direct result of UCU’s action:

1/75 is an improved accrual rate

The cap for earnings to still receive defined benefits was raised from £40k to £55K and it has been confirmed that this will be uprated in line with inflation (CPI rather than RPI)

The employers agreed to increase their contributions to 18% and to maintain this for 5 years.

 

It remains disappointing that the employers were determined to introduce a defined contribution element to pensions, but it seems that the ballot of acceptance was necessary as negotiations were unlikely to achieve a reversal of this. The negotiating team stated that in their view substantial industrial action would be needed to bring about any improvements. Some within the union feel that further industrial action could have brought more concessions.

Members of staff, including representatives from the UCU committee, attended the pension event that the university organised on February 3, and put questions to Mercers, the actuaries who are acting on behalf of UUK. There was a notable lack of detail on elements such as AVCs, the costs of running a hybrid scheme, and the costs and complexity of the defined contribution pot, which was far from reassuring.

 

What’s next?

USS will hold a 60 day consultation, expected to take place mid-March – mid-April. This will be for all USS pension members – and is a further opportunity to ask for changes.

UCU will continue to call for the valuation methodology to be changed.

UCU will continue to call on USS trustees to explain their actions