Growing numbers of post-92 universities are likely to pull out of collective pay bargaining if the main pension scheme serving this part of the sector is not reformed, leaders have warned.

Employer contributions to the Teachers¡¯ Pension Scheme (TPS) now stand at 28.68 per cent of staff salaries, compared to 14.5 per cent under the Universities Superannuation Scheme (USS), which primarily serves more historic institutions. Institutions that gained university status under the 1992 Higher Education Act are required to offer TPS pensions to their academic staff.

Writing in a published by the Higher Education Policy Institute, Jane Embley and Tom Lawson ¨C respectively chief people officer and provost at Northumbria University ¨C say that this means the UK higher education sector ¡°is no longer on a level playing field¡±.

They write that, on a typical academic salary of ?57,500, pension contributions of ?8,300 annually under USS would be ?16,500 for a TPS employee, with the gap rising to as much as ?12,000 for professors on ?85,000, and the ¡°chasm¡± at institutional level running to millions of pounds.

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While the Department for Education gives state schools funding to cover TPS cost increases, and has allowed independent schools to stop offering TPS pensions to new staff, no such support has been forthcoming for the university sector.

¡°The impact of this is extraordinary. It essentially means that in one part of the sector, it costs employers the same amount¡­to employ 503 staff as it costs to employ 1,000 staff elsewhere,¡± Ms Embley and Professor Lawson write. ¡°Quite apart from the burden this places on institutions, it is deeply anti-competitive.¡±

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Growing numbers of post-92s have shifted new employees off TPS pensions by employing them via subsidiary companies, but the blog authors warn that this approach has ¡°many potential pitfalls¡±, with the impact on costs slowed by the exclusion of existing staff, and with potential implications for the ability of new academic recruits to participate in the Research Excellence Framework.

¡°It seems likely that until solutions are found, many institutions might find themselves having to rethink their ability to participate in national collective pay bargaining,¡± the blog says. ¡°With higher pension costs and higher National Insurance contributions, it may be necessary, for now at least, for institutions to take control of salary increases to contain the total costs of employment.

¡°This is not an attractive option, but it is hard to think of any others that would be as swift and effective in containing cost increases, although of course it would come with its own industrial relations challenges.¡±

Coventry University recently announced plans to transfer the employment of some serving academics to a subsidiary company, warning that contribution levels were ¡°simply unaffordable¡±.

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Ms Embley and Professor Lawson conclude their post by saying that ¡°the lack of institutional control over which pension scheme can be offered, and the high, fixed nature of the employer contribution to TPS¡­cannot be sustained¡±.

¡°Obliging institutions to continue to offer TPS places greater financial constraints on precisely those universities that might do the most to widen access and give greater opportunity to those from disadvantaged backgrounds as per the government¡¯s priorities,¡± they write.

¡°It is an obvious unfairness that some of students will go to institutions where it is substantially more expensive to employ staff than in other institutions that are more traditionally regarded as elite.

¡°The time is now to remove this inbuilt, and presumably unintended, unfairness and end the obligation upon modern universities to offer TPS.¡±

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chris.havergal@timeshighereducation.com