The majority of university staff will vote for strike action on pensions unless their employers concede to lowering contributions to the Universities Superannuation Scheme closer to 8 per cent, the University and College Union has said.
Jo Grady, general secretary of the UCU, said she is “quite confident that university staff will vote for strike action” later this month unless higher-education employers offer to further lower the rate paid by members.
An offer made by Universities UK to restrict a rise in USS member contribution rates to 9.1 per cent of salary – compared with the current 8.8 per cent – in exchange for withdrawing the September ballot for strike action was rejected by UCU last week. With no agreement or change in actuarial assumptions, employee contributions will rise to 9.6 per cent.
Speaking at a UCU media briefing on Monday, Ms Grady explained the latest offer represents another pay cut for university staff.
She said: “We are concerned that those on lower pay may decide they simply cannot afford to pay for a pension anymore, putting the future of the scheme at risk.”
However, Ms Grady pointed out there was still time for employers to put forward a compromise deal, potentially avoiding strike action.
She said: “UUK could push much harder on USS to ensure that these things are taken seriously by the scheme’s [trustee] board, but are not." A joint expert panel published a report scrutinising the 2017 USS valuation last year, whose recommendations suggested a significant decrease in the overall contributions required by the scheme.
She added: “For UUK to try and [prevent our ability to] engage in a legitimate debate and potentially ballot for strike action in the run-up to the 2020 valuation... the very idea that we would tolerate that is absurd.
“But it also suggests they are going to come for pensions again [in the 2020 valuation]; why else would they want to tie our hands if they were just intending to be nice and reasonable employers?”
A spokesperson for UUK said: “The suggestion that UUK (and employers individually) have not pushed USS to implement all the JEP recommendations is wholly inaccurate.
“It is unthinkable that employers would agree to pay an additional £250 million each year into the scheme (and bear the consequences of doing so) without first exhausting every possible avenue to a lower rate.”
The spokesperson added: “At the joint negotiating committee [held on August 22] UCU negotiators indicated they were unwilling to compromise, refused to consult their members over the alternative offer, and consequently rejected it.
“Our offer would result in a lower member contribution rate of 9.1 per cent – exactly aligned with the rate proposed by the JEP in its first report, which employers and the union support.”
Changes to members’ benefits
An analysis published today on how benefits for USS members have been reduced in recent years, calculated by First Actuarial, reveals typical scheme members could pay around £40,000 more into their pension pot but receive £200,000 less in retirement, leaving them £240,000 worse off in total.
The analysis examined how recent changes to the scheme, including increased contribution changes to 9.6 per cent of salary from October this year from 6.35 per cent in 2011, has affected members’ costs and benefits.
Responding to the figures, a UUK spokesperson said: "Compared with 2011, employers are now paying more than £400 million extra per annum into USS – having increased their contributions from 16 per cent to 21.1 per cent of salary from October 2019.
"Scheme members will realise that winding the clock back to 2011 and freezing the scheme in time is just not credible."
The comments come a week before ballots open in 69 UK universities. Last week, the trustee of the USS issued a series of consultation documents in a bid to commence agreements with employers on a suitable recovery plan for the scheme.
The final meeting of the USS trustee board will take place on September 12, the deadline for the trustee to advise employers of the contribution rates to apply from October 1 2019.
Commenting on the figures, Hugh Nolan, director at Spence & Partners, said: "At the end of the day, the employers have to manage their cash responsibly… it is hard to see how university staff will win the war with the employers.”
He continued: “Employers cannot spend money that they do not have, and although it is very sad the employers might hold the line, they will do so because they have to.
“While there is still time, I think any change [to the offer on the table] will be a last-minute change.”
He added: “If the employers can argue that they are trying to keep costs down for the students, they may get a lot of sympathies... but likewise, if the staff can persuade the students they are trying to keep university costs down, it might go their way too.
“Ultimately, it will be the staff and students who are paying the fees for the extra pension costs... over time this could build up a lot of resentment.”
