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.
The University and College Union is preparing to ballot its members next Monday over strike action following a breakdown in relations with employers over USS’s controversial 2020 valuation, the results of which threatened “ruinous” contribution rate hikes.
Negotiations lasted several months, culminating with UUK tabling an alternative reform proposal, which included a 20-year moratorium on scheme exits and pledges of greater covenant support.
The USS trustee accepted these proposals, which came at the price of a major governance review, and a pledge to explore alternative scheme designs aimed at making USS sustainable in the long term.
If employers really want to avoid industrial action this term, they must at the very least indicate they are sincere about working with UCU and its members. The best way to do that is to immediately withdraw their disgraceful pension cuts
Jo Grady, UCU
While the employers’ proposals were sufficient to ward off the threat of contribution rate increases ranging from 30.7 per cent to 56.2 per cent of payroll, UCU was left unhappy with a solution that it said amounts to a significant cut to member benefits, while having its own alternative proposals ignored.
On Wednesday, UUK called for UCU to come back to the negotiating table, and to assist with drawing up the governance review and in the exploration of alternative scheme designs.
Employers also extended an invitation for the union to join “a tripartite task and finish group along with USS to urgently progress work on high-quality, lower-cost pension options, which is an important part of the employers’ package of proposed reforms,” UUK said.
“This would give staff flexibility to pay in less than the current mandatory rate of 9.8 per cent of salary, and still benefit from a generous employer contribution towards their pension.”
Employers have asked USS to model defined benefit and defined contribution options for the Joint Negotiating Committee “to discuss and explore which options best fulfil the needs of members currently choosing not to be in the scheme”.
A UUK spokesperson said: “We’re creating a better and more inclusive pension scheme which is affordable for early career staff, exploring how scheme redesign could offer enhanced pension benefits and better value for money for members and employers, and establishing an independent review of scheme governance.
“We expect that the UCU, which represents all scheme members, will want to play a full part in these important discussions and decisions. There are many issues like these where employers and their staff agree that change is necessary and by working together quicker progress can be made.”
Union wants ‘sincere’ commitment from employers
UCU appeared disinclined to accept the offer, however.
Under its preferred solution, employers would pay contributions of 24.9 per cent, up 3.8 per cent from the existing rate, while members would pay 8.1 per cent, 1.5 per cent less than they do currently.
Accrual would be reduced from 1/75th to 1/80th, while the salary threshold up to which DB benefits accrue would be lowered to £40,000.
Additionally, all benefits would receive the same protection against inflation as they do currently, via a system of trigger contributions payable by employers if inflation exceeds 2.5 per cent, and members would be able to choose to pay even lower contributions — zero per cent or 4 per cent — while receiving the same level of contributions from their employer and continuing to build up a guaranteed pension, at a proportionately lower accrual rate, it said.
Members who spend less than two years — but more than three months — in the USS would be entitled to the same benefits as everyone else. This is in contrast to employer proposals under which an average scheme member would see benefits cut by as much as 35 per cent, UCU argued.
UCU general secretary Jo Grady said: “All the press releases in the world cannot hide the fact that UUK are cutting USS members’ guaranteed pensions by 35 per cent. Instead of wasting time on ridiculous PR moves like this to undermine our upcoming strike ballot, employers should withdraw their cuts and agree to a new valuation of the scheme.”
She argued that UUK’s call for collaboration does not “reflect the reality of the discussions that have taken place, which is ironic to say the least”.
“UCU is of course open to exploring new areas of scheme design, including conditional indexation, but as yet no detail has been provided or terms of reference been drawn up. Reform via press release will not deliver the meaningful change that members need, nor will hollow gestures of ‘joint working’ after employers have already forced through their cuts,” Grady continued.
“It’s quite something for employers to now be talking about exploring a high-quality, low-cost option for members. This was exactly what UCU negotiators proposed in the union’s own plans, which for the first time in the scheme’s history would have guaranteed benefits for the thousands of low-paid and insecurely employed staff who are currently priced out of joining USS.
USS sponsor claims members will be ‘priced out’ without reform
Universities UK, the group representing 340 Universities Superannuation Scheme employers, has warned that USS members will be priced out of the scheme if the union’s threats of strike action derail reform proposals.
“Our members haven’t forgotten that employers spiked these proposals, opting to force through their own cuts instead.”
She added that there have already been two USS governance reviews, which produced “clear recommendations”, and there is no need for another review and “calling for one is just employers kicking the can down the road, yet again”.
“If employers really want to avoid industrial action this term, they must at the very least indicate they are sincere about working with UCU and its members. The best way to do that is to immediately withdraw their disgraceful pension cuts.”
