UCU proposes solution to avoid further USS strikes

UCU members voted to strike in November last year, with industrial action supported in 31 of 68 institutions balloted. Subsequent reballotssaw a further 12 institutions back industrial action, with separate disputes over pay and conditions meaning all 68 will face some degree of disruption in the coming months.

The USS strikes are part of a long-running battle over the scheme’s controversial 2020 valuation, which saw the scheme’s deficit quadruple to more than £14bn, requiring that contributions be raised to between 30.7 per cent and 42.1 per cent of payroll under the most favourable scenarios. 

If employers are serious about stopping UK-wide strike action in February, they need to agree to seriously consider UCU’s proposals at the next meeting of negotiators

Jo Grady, UCU

The UCU, the USS trustee and employer representatives Universities UK have been locked in negotiations for months, with an agreement struck between the latter two that included stronger covenant support measures and a 20-year moratorium on scheme exits.

UUK argued that the deal would produce a more favourable outcome than the hiked contribution rates that employers and unions have branded “unaffordable”, but the UCU has vigorously contested this claim, arguing that employers’ proposals amount to benefit cuts of as much as 35 per cent for a “typical member”, something UUK disputes.

The next round of strike action is yet to be announced, but the UCU has suggested it could occur as early as February.

A way out?

Now the union, which has previously called for a new valuation, has presented a new set of proposals it says will avert the need for further disruption, and see benefits protected in exchange for a more modest increase in contributions.

It pointed to new figures from USS showing its assets had jumped to more than £92bn, £25bn higher than was the case at the time of the last valuation, which it said proved that “employers’ justification for the cuts has now evaporated”.

The UCU’s new plan calls on UUK to pressure the USS trustee into issuing a “moderately prudent, evidence-based” valuation of the health of the scheme as of March 31 2022, to be issued for consultation in June.

It further asks employers to provide “the same level of covenant support as for their own proposals” to facilitate “a cost-sharing of current benefits throughout the 2022-23 scheme year”.

This would translate as 11 per cent member contributions and 23.7 per cent employer contributions from April to October this year, rising thereafter to 11.8 per cent for members and 25.2 per cent for employers.

The union also demands that employers agree to pay a maximum of 25.2 per cent and members a maximum of 9.8 per cent from April 1 2023, “so as to secure current benefits or, if not possible, the best achievable as a result of the call on the USS to issue a moderately prudent, evidence-based valuation”.

UCU general secretary Jo Grady said: “These are serious proposals that would see both employers and employees pay slightly more to protect retirement benefits and allow for a new, evidence-based valuation of the pension scheme to be conducted.

“Employers can stop this dispute at any time and have been offered a route out which protects pensions and averts widespread disruption on university campuses.”

Grady reiterated that the employers’ case for imposing the alleged 35 per cent cuts to guaranteed retirement income rested on “a flawed valuation” conducted “while markets were crashing”, with the subsequent “unprecedented” rise in assets meaning that case has now “evaporated”.

“If employers are serious about stopping UK-wide strike action in February, they need to agree to seriously consider UCU’s proposals at the next meeting of negotiators. The university sector continues to show strong growth and university bosses can afford to meet our proposals. If they refuse to do so, they are choosing to force staff to walk out,” she said.

UCU proposals ‘not serious’

UUK and the USS have long disputed the UCU’s figures and calculations, especially as regards its suggestion that the average USS member faces benefit cuts of as much as 35 per cent under the employers’ proposals.

Responding to UUK’s latest demands, a UUK spokesperson promised to “share the UCU’s proposal” with employers, but again found fault with the numbers presented.

“The UCU’s suggestion that employers pay 23.7 per cent of salary from April — an increase of 2.3 per cent and over £200m more a year — rising to 25.2 per cent next year, is far beyond the mandate employers have given UUK,” they said. 

“No employer has agreed to pay such high costs because of the damaging impact on teaching, research, the student experience and jobs. The increase in member contributions, from 9.8 per cent to 11 per cent of salary, and then 11.8 per cent of salary next year, will make the scheme unaffordable for many staff and, undoubtedly, increase the already high dropout rate among the lower-paid.

“The union’s proposal does not appear to be a serious attempt to reach agreement as it doesn’t reflect the views employers have expressed in consultations,” the spokesperson continued. 

“Employers will also question why the proposal has arrived so late in the valuation cycle — especially since industrial action has already been taken — and will be keen to understand why it differs significantly from that previously briefed to the media by the UCU, which proposed benefit reforms to tackle the scheme’s increased costs.

“We look forward to a formal discussion through the Joint Negotiating Committee about both the UCU and UUK proposals, with the hope that an affordable solution can be found.”

A USS spokesperson said: “It is for UCU and UUK’s representatives on the Joint Negotiating Committee to decide what benefits are provided by the scheme, and how the contributions required to fund them are split between members and their employers.

“The UCU’s proposed way forward is not clear on how the funding requirements of the scheme would be met and what covenant support would be available in practice. We will work with the UCU and with UUK to try to clarify the proposal.”

The USS spokesperson added that subsequent asset growth was anticipated in the valuation assumptions, but that these are “one part of the picture”.

“The cost of funding the pensions already promised to members (our liabilities) and the cost of funding new pension promises (the ‘future service cost’) have also increased since the valuation. There has been a significant amount of volatility in these factors since the 2020 valuation date,” they said.