THES reporters unravel the tangle of pension options facing staff three years after the reorganisation of higher education and examine the barriers to a unified system. Although it is three years since the binary line was formally rubbed out, remnants of division have persisted between the old and new universities, not least in the shape of contrasting pension schemes. There are now signs that even these may finally disappear. Yet a fully unified pensions scheme - and with it a unified university sector - is still some years off.

Since 1975, academics in the old universities have signed up to the USS which has assets of Pounds 10 billion and boasts a generous employer contribution of 18.55 per cent as well as benefits relating to ill-health, retirement and dependents.

As one of the last relics of local authority control of the former polytechnics, academics in the new universities have the much older TSS, which has an employer contribution of just 8.05 per cent, and offers fewer benefits than the USS.

This has presented problems for colleges, whose staff are in the TSS, merging with old universities whose staff are in the USS. When Bulmershe College merged with Reading University, the college academics were told that they could only join the USS if they agreed to reduced salary packages which would allow the university to make up the 10.05 per cent difference between the employer contributions in the TSS and USS schemes. This plan was overruled so that transferring college academics were permitted to stay in the TSS, and only new recruits were admitted to the USS.

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This arrangement for higher education institutes merging with old universities has become the norm. When the West London Institute of Higher Education (now renamed Brunel University College) merged with Brunel University in February, non-academic staff remained in the London Borough of Hounslow local government pension scheme, transferring academics remained in the TSS and new academics are being introduced to the USS.

Over time all traditional university academics will be ranked under the USS scheme, as new academics replace the old. But this arrangement only applies to merging institutes of higher education, and not to merging nursing colleges. Nursing colleges are a different kettle of fish, because their staff belong to the National Health Service pension scheme, an unfunded scheme with an employer contribution of just 4 per cent.

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It is now Government policy that nurse-training establishments should leave the NHS and merge with universities. Last week's incorporation of the Durham and Teesside College of Health into the University of Teesside was the latest in a lengthy series of transfers under which the process is being carried out.

Old universities have been anxious to attract these colleges and establish faculties of nursing and midwifery, but the pension scheme issue has been a major stumbling block, more so than for the new universities, which share with the nursing colleges an unfunded scheme with an ungenerous employer contribution.

The main difficulty has been the cost of transfer. As well as the employer contribution differential, the NHSPS members enjoy enhanced benefits, above those justified by the money paid into the scheme. For instance, mental health workers receive a pension worth one and a half years after just one year's service; and there is also an earlier retirement age for NHS workers. This worried those responsible for the USS who were keen to protect the fund, and made merger agreements between nursing colleges and old universities fiendishly expensive.

The option worked out for institutes of higher education - where transferring academics could stay in the TSS scheme - was not available here, because Virginia Bottomley, Secretary of State for Health, announced that NHS workers could no longer retain membership of the NHSPS once the colleges merged with universities. Also, while both the NHSPS and the USS participate in the public sector transfer arrangements, it was not felt that the existing transfer terms provided sufficient amounts for the funding of all accrued pension entitlements of employees entitled to join the USS.

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The solution - worked out by Government actuaries - has been for the NHS to make some basic transfer payments for NHSPS members. David Anderson-Evans of the Committee of Vice Chancellors and Principals, a trustee of the USS, estimates that this will lead to many more mergers between nursing colleges and universities.

"It means that old and new universities are on a level playing field when bidding for these colleges," he says.

According to Michael Powell, assistant secretary of the CVCP, ten nursing colleges are now destined to merge with old universities. "I don't think there will be a great many more than that, but it's very hard to tell."

But Geoffrey Talbot, of the Association of University Teachers, warns that the arrangement is not a final solution. As he puts it: "Universities are no longer faced by a hurdle higher than the horse - which even troubled the puissance specialist - but they are still confronted by a fence with a ditch behind it."

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The future cost burden for universities will be recruiting extra nursing faculty staff on USS terms. But Mr Anderson-Evans expects the financial burden on the universities to ease after a forthcoming USS valuation next year, which is predicted to allow a fall in the employer contribution to 14.75 per cent.