USS must work for support staff

March 19, 2015

In the otherwise comprehensive report on the changes to the Universities Superannuation Scheme (“Days of reckoning”, Features, 12 March), there was no mention of some of the key issues facing the more than 10,000 support staff in the scheme.

The increase in employee contributions will stretch the affordability of the scheme for low-paid staff. The failure of the USS to introduce tiered contribution rates will mean that low-paid staff will continue to subsidise the pensions of their higher-paid colleagues. Low-paid staff in the scheme in the pre-92 sector will pay 2.5 per cent more of their salary than staff in the post-92 sector for an inferior pension. Unison is calling for a fairer contribution structure for staff that more accurately reflects the likely benefits members will receive from the scheme. This will both protect the affordability of the scheme for lower-paid staff and mirror arrangements in the other major public sector schemes.

Unison is also calling for an urgent review of the exclusivity arrangements in the USS that force support staff to join the scheme on promotion. The removal of the final salary link will mean that the USS is no longer eligible to remain in the Public Sector Pension Transfer Club. This will mean that even more staff who are promoted to a USS-eligible post are likely to suffer a pension detriment if they wish to transfer their pension benefits. This is unfair to staff and could create a disincentive for staff in seeking promotion, which will be to no one’s benefit.

Ben Thomas
National officer, Unison

 

The reason I originally was interested in doing an interview about the pension changes is that I think my age group would be better off moving to a full defined contribution scheme.

It’s not that university employers in the UK are not generous – there are very few institutions of higher education in the US where the employers contribute more than 15 per cent to pensions. When I was employed at West Virginia University, the match was a mere 6.5 per cent.

I would rather see my employer obliged to pay 14 per cent into an equivalent of the US’ Teachers Insurance and Annuity Association – College Retirement Equities Fund for the lifetime of my service, match it with 8 per cent of my own money and be done with the constant negotiation. That would be 4 per cent less than the employers are set to contribute to earners in the under £55,000 bracket. Take that money saved and use it to pay off obligations from the defined contribution era and call it a day.

To reiterate, a 14 per cent contribution by employers would still put UK institutions ahead of most US counterparts. It’s the uncertainty that’s the problem. Obviously, the market brings uncertainty – but I find that form of uncertainty much less stressful and easier to plan for than the whims of government bureaucrats and pension regulators.

Tom Scotto
Professor of government
University of Essex

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