Vice-chancellors marked the end of the latest round of strike action focused on UK sector pensions by pushing through the cuts that union members had walked out over.
The joint negotiating committee that controls the Universities Superannuation Scheme formally voted to implement reductions to member benefits with the backing of Universities?UK representatives and on the casting vote of the panel’s independent chair, Judith Fish. Alternative proposals put forward by the University and College Union, which holds the other seats on the committee, were rejected.
The decision came at the close of a seventh day of strike action by UCU members at 44?universities opposing the reforms, which followed a three-day walkout in December.
UUK said the vote “secures an affordable solution…and provides a more sustainable platform on which the scheme’s longer-term future can be built”. But UCU said the dispute was far from over and promised more strike action, as well as a marking boycott.
At the heart of the dispute is the USS fund’s deficit, estimated to run into billions of pounds, and UUK’s bid to keep pension contributions at their current level of 30.7?per cent of salary, rather than rising to between 42.1?per cent and 56.2?per cent, as proposed by USS managers.
Under UUK’s reforms, promised pension payments will build up more slowly, with the fund’s “accrual rate” for “defined benefits” reducing from 1/75 to?1/85. And the salary threshold up to which these defined benefits will accumulate is being reduced from ?60,000 to??40,000. Twenty?per cent of earnings above the threshold are invested into a “defined contribution” scheme, under which incomes are tied to stock market performance.
The UCU has estimated that the changes could reduce employees’ guaranteed retirement benefits by as much as 35?per cent, cutting members’ incomes after they stop working by thousands of pounds annually. UUK has countered that the average reduction would be 12?per cent, and that the increase in contributions that would go ahead otherwise would also have cost members dearly.
UUK has not got its way on keeping contributions flat, with employer payments set to?grow?to 21.6?per cent of salary from April,?rising?by 0.2?per cent in order to defer a planned 2.5?per cent cap on inflationary increases in pension entitlements, which had provoked concern in a member consultation.
However, union members continue to question whether the cuts are even necessary, with new data released by the USS last week indicating that its deficit has fallen sharply in the past year following the recovery of assets to pre-pandemic levels.
A UUK spokesman claimed that the joint negotiating committee’s decision “gives stakeholders an opportunity to break the cycle of disagreement and dispute ahead of the next valuation”.
UUK added that 93 out of 97 employers had opposed the UCU’s counterproposal, which offered a time-limited increase in contributions in return for a new valuation of the USS fund being conducted.
“This settlement ensures the continuation of a valuable defined benefit element to the pensions offer while sparing both members and employers from the damaging consequences of much higher contributions from April,” UUK said.
“Employers would rather the scheme was in a financial position where benefit reform was not necessary. However, without these reforms, costs would have risen to unaffordable levels for employers, while the increased costs for members would have seen more people leave the scheme and miss out on a valuable employer contribution towards their retirement.”
Jo Grady, UCU’s general secretary, said the union would consider a vote on further strike action as well as launching a marking and assessment boycott.
“University vice-chancellors have today chosen to steal tens of thousands from the retirement income of staff,” Dr?Grady said. “This is a deplorable attack, which our members won’t take lying down.
“If these so-called leaders of higher education thought this was the end of this dispute, they have another thing coming.”
While the latest USS strikes have concluded, union members at 63 universities will continue to man the picket lines next week in a separate dispute over pay and working conditions.