Staff approaching retirement age risk losing of thousands of pounds from their annual pensions as voluntary severance schemes spread across UK universities, it has been warned.

Early retirement reductions applied by the Universities Superannuation Scheme can cost some employees tens of thousands of pounds in total, and are likely to affect more people as thousands of jobs are axed across the sector, academics said.

One academic in their late 50s who?was offered voluntary severance told?Times Higher Education they were concerned that there was a ¡°cliff edge¡± for workers approaching retirement age, explaining that the difference between their annual pension at age 59 and 11 months and age 60 was ?2,735.?

They argued that workers approaching pension age were being left with ¡°little choice¡± but to take voluntary redundancy, and that while universities claim such schemes are ¡°voluntary¡±, ¡°they¡¯re also threatening staff with waves of compulsory redundancies¡±.

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¡°If you¡¯re 58 or 59, you have no option; you don¡¯t have a career ahead of you to recoup those losses. [But] you are, for the sake of a few months, losing out on thousands [of pounds] for the rest of your life. It seems completely iniquitous, and then there¡¯s no adjustment for it,¡± they said.

¡°No one¡¯s really aware of it. People are aware that their pensions will be reduced if they stop earning because there¡¯s less money being paid in, and they¡¯re probably also aware that there¡¯s a penalty for withdrawing it early. But what are you supposed to do if you're too old to get another job, and not old enough to withdraw your pension without a penalty? You¡¯re screwed.¡±

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USS members can retire as early as age 55 currently. Deductions may apply for anyone retiring before age 66 but they may not apply to staff retiring early once they are past 60 with ¨C crucially ¨C their employer¡¯s consent.

Graham Thompson, a recently retired academic, said that he ran into difficulties when his former employer, the University of Nottingham, offered a voluntary severance scheme for staff which would bring their employment to an end in December 2024 ¨C one month before he turned 60.

USS calculations showed that his pension would be worth ?2,094 less if he retired at that point compared with if he waited a month.

¡°I¡¯ve checked everywhere, and I can¡¯t find anywhere where that this information is readily available, either on the USS website or anywhere else,¡± Thompson said. ¡°I imagine a lot of people are going to suffer a penalty by taking a severance scheme before they¡¯re 60 [and are not] going to be aware of [this] either.¡±

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While Nottingham eventually agreed that Thompson could retire after his 60th birthday to avoid the cliff edge, he argued that the issues are not divorced from the deteriorating working conditions across the sector.

¡°Morale in universities is at rock bottom, and people are desperate to get out. And the offer of a payoff may be the thing that will make you want to go¡­it partly explains why universities aren¡¯t very helpful with people because it¡¯s not in their interests to examine their financial situations or give them advice which ends up with them staying. I think they want people to go,¡± Thompson said.

The USS ¨C which mainly covers staff in pre-92 universities ¨C has stressed that pension calculations are complex and that it cannot offer financial advice, which is why the information on its website was ¡°intentionally high level¡±.

However, it told THE that its benefit calculator tool, plus formal retirement quotes and guidance, were ¡°all intended to help members make informed decisions¡±.

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¡°We understand these are complex decisions and are engaging with employers to ensure they are able to signpost this guidance and can effectively support their employees. Questions relating to voluntary severance should be directed to a member¡¯s employer in the first instance and, if required, they can speak to us for support,¡± a spokesman said.

Michael Bromwich, CIMA professor of accounting and financial management emeritus at the London School of Economics, said that USS calculations were ¡°complex¡±, and in some cases can feel ¡°shattering¡± for those retiring early.

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¡°It is important that people are aware that early retirement before the normal pension age means a reduced pension because you and your employer stop contributing and your benefits have to be spread over a longer period,¡± he said.?

juliette.rowsell@timeshighereducation.com