Strike action at the University of Dundee is set to continue in October over proposals to move workers from a defined benefit to a defined contribution plan that unions say will leave members 40 per cent worse off in retirement.
Protests kicked off in September over the plans to close the University of Dundee Superannuation Scheme, a change Unison said would create “the worst higher education scheme in Scotland”, according to a report in The Courier.
The protests were followed by a week of industrial action that is now set to be repeated, with all Unison members striking on October 25 and 26, finance workers striking for a week from October 27, and mail room, security and library staff striking for two weeks from the same date, a union spokesperson confirmed.
Previous strike action was conducted alongside the University and College Union, and the union Unite has now joined for the next round.
Local and national politicians support our members against these attacks and have urged the principal to get back around the negotiating table to discuss a credible alternative, including a DB scheme, which doesn’t throw our members into pension poverty
Mo Dickson, Unison
Should the strike proceed, the change would affect 900 workers in grades one to six. Staff above grade six are enrolled in the Universities Superannuation Scheme.
A Unison spokesperson told Pensions Expert this meant that the lowest-paid staff at the university will be most affected, with the majority of these being women.
Unison branch secretary Phil Welsh said: “Our members are absolutely determined to continue fighting this proposal. Unison members have already taken five days of strike action and will continue until university management start to listen. Unison has put forward several compromise proposals which would share the risks and costs of future benefits.”
Unison regional organiser Mo Dickson added: “Local and national politicians support our members against these attacks and have urged the principal to get back around the negotiating table to discuss a credible alternative, including a DB scheme, which doesn’t throw our members into pension poverty.
“The proposed DC scheme has some serious failings from an equalities perspective. It’s now over a week since the principal met our members, who continue to feel let down and undervalued. This issue isn’t going away.”
A spokesperson for the university said: “We are hopeful there will be a resumption of talks with the unions next week [October 18–22], regarding the proposed changes to the local University of Dundee Superannuation Scheme. The university is very much open to further discussion within the consultation period, which was extended at the unions’ request and continues to November 14.”
Current structure unaffordable
In a Q&A document published earlier in October, the University of Dundee said that the costs of running the superannuation scheme have risen in recent years. The deficit as of its 2017 valuation was £44.9bn, and this is likely to have increased by the 2020 valuation, despite additional contributions having been paid.
At present, the university pays a higher percentage of staff salary into the scheme compared with the USS.
The current rate of employer contributions (including deficit recovery payments) to the USS is 21.1 per cent, due to rise to 23.7 per cent from October 2021.
For the University of Dundee Superannuation Scheme, the sponsor currently pays 17.1 per cent employer contributions, plus the equivalent of 9 per cent to address the pension fund’s deficit, around £2m a year, the Q&A explained.
“This is equivalent to a total employer contribution of 26.1 per cent of staff salary in the University of Dundee Superannuation Scheme, 5 per cent more than is currently paid to USS,” it stated.
The document also stated that the employer contribution to the scheme rose to 28.3 per cent in August, with the deficit repayment increasing to approximately 15.8 per cent, or £3.5m a year, “a total equivalent to approximately 44.1 per cent of staff salary”.
Dundee to pay up to 13% in new DC scheme
Under the proposed DC arrangement, contributions for staff in grades one to six would be around 10 per cent, with an additional 2 per cent for death-in-service and ill-health benefits.
“In addition, the university will settle the 2020 actuarial valuation, and will continue to pay further contributions to fund pensions already accrued at the date of the University of Dundee Superannuation Scheme closure, a total employer cost of approximately 30.1 per cent,” the Q&A explained.
“This means the university would continue to pay a higher percentage of staff salary into University of Dundee Superannuation Scheme compared with USS.”
The new DC scheme would operate on a tiered system of contributions, with the university paying 10 per cent for “minimum level” members making contributions of between 2 and 4 per cent.
It would pay progressively more for “entry-level members” contributing between 5 and 8 per cent: 11 per cent for members paying 6 per cent, 12 per cent for those paying 7 per cent, and 13 per cent for those paying 8 per cent.
“If you did not make a choice about how much to pay, you would automatically be entered at the entry level, where you would pay 5 per cent of your pensionable salary and the university would pay 10 per cent,” the Q&A stated.
Members would have the flexibility to pay more or less than 5 per cent, with the minimum being 2 per cent of pensionable salary, it continued.
“You could also pay more than 8 per cent if you wished, although the maximum the university would pay is 13 per cent.”
The Q&A continued: “Whether you would be better or worse off in the new arrangement depends on a lot of factors such as your age, how you wish to use your pension savings, the investments chosen in the new arrangement, and how they perform and your future salary increases.
USS employers call for union co-operation ahead of strike ballot
Universities UK, the group representing 340 Universities Superannuation Scheme employers, has called on trade unions to co-operate with it as it bids to reform the embattled pension scheme.
“Therefore, it is not possible to say with certainty whether you would be better or worse off in the new arrangement until you actually retire.”
It stated that making no changes would prevent the university from making “important investments”, and “it is likely that it would still need to make changes in the future. The longer the university leaves things before making the changes, the greater the issue will become”.
“Other universities have taken the tough decision to change their pension provision as the cost of providing this type of pension continues to rise. Some universities have already implemented changes, while others are consulting with their membership,” it added.
