University staff will be more than £200,000 worse off under new pension arrangements as a result of rising contributions and reduced benefits, according to analysis for the University and College Union.
On the eve of a new ballot over strike action at British universities, the UCU published research claiming that a typical member of the Universities Superannuation Scheme (USS) would pay £40,000 more into their pension but receive almost £200,000 less in retirement as a result of changes introduced since 2011.
The strike ballot is due to open on 9 September at 69 universities with UCU members in the pension scheme and will run until the end of October. Last year more than 40,000 staff took part in sustained and unprecedented strike action over their pensions that brought campuses to a standstill.
Further strikes in the new academic year appear likely amid growing frustration among UCU members who are exasperated by increasing contribution costs and lack of progress in the dispute.
The UCU research is based on modelling by the financial consultants First Actuarial, who looked at the impact of changes to the USS including increased contributions – from 6.35% of salary in 2011 to 9.6% as of October – the closure of the final-salary element and the introduction of a salary cap for defined benefits. It found that those on higher salaries would lose the most.
Jo Grady, the UCU general secretary, said: “This analysis details the substantial losses suffered by USS members in recent years. A typical USS member will be around £240,000 worse off because of the changes made to the scheme since 2011. It is no wonder they have had enough and ballots for strike action open on Monday.”
Universities UK (UUK), representing employers, said the cost of providing defined benefit pensions had risen since 2011 because people were living longer and the economic environment had fundamentally changed.
The UCU said increased pension contributions, which went up from 8% to 8.8% in April and are due to rise again to 9.6% in October, represented another pay cut for staff. Last month it rejected an offer by UUK to swap slightly reduced increases in staff pension contributions for a two-year bar on strike action.
Grady said: “Universities have to recognise the anger and frustration that members feel about the recent changes, how the scheme has been valued and how it has been run. It is not good enough to come back time and again with proposals that force members to pay more for reduced benefits.”
The UCU has been in dispute with university employers since 2017 after an attempt to transform the USS from a defined benefits scheme – which fixed pensions to salaries – to a defined contribution scheme with considerably lower pension payouts for most members. After the strike action, employers backed down and proposed a joint panel of experts to look at the USS’s structure and valuation.
A UUK spokesperson said: “Compared with 2011, employers are now paying more than £400m extra per annum into USS – having increased their contributions from 16% to 21.1% of salary from October 2019. This is far more than most other private pension schemes.
“Crucially, members will keep their current benefits, which in monetary terms are more valuable than ever given the increased cost of providing pension promises. Two weeks ago UCU negotiators rejected an offer of lower member contributions. There is still time for the unions to consult their members on it.”
— to www.theguardian.com