Disquiet grows over motives behind pension overhaul

Employers' forum raised possibility of slashing contributions to 10 per cent. John Morgan reports

December 16, 2010

Controversial plans to cut benefits in higher education's £30 billion pension fund have prompted staff rebellions at a growing number of universities, as evidence has emerged that employers want to slash their contributions to the scheme.

The Universities Superannuation Scheme (USS) and higher education employers are consulting staff on proposals that include ending final-salary benefits for new members, introducing a pension age of 65 for all members, and linking pension increases to consumer price index inflation, with a 5 per cent cap.

Opponents of the changes say that an unpublished document, seen by Times Higher Education, reveals that the real agenda behind the employers' push to introduce career-average pensions for future members is drastic cost-cutting - a position never publicly stated.

The document, drawn up by the Employers Pensions Forum (EPF) during negotiations earlier this year, says it is "possible that the employers' proposed changes will produce savings that will enable the employers' contribution rate to be reduced to a more realistic level".

This level should "ideally" be "closer to 10 per cent" than the current 16 per cent.

Employer contributions went up from 14 per cent to 16 per cent in October 2009, which the EPF says will cost the sector £110 million every year.

An EPF spokesman said: "The employers are committed to maintaining their present contribution rate of 16 per cent for the foreseeable future...The proposed changes will reduce the combined cost of future service for the final-salary and (career-average) sections, and any remaining funds will be used to diversify USS assets away from equities in order to reduce investment risks."

Critics complain that consultation documents sent to 130,000 scheme members present only the employers' case for change, omitting rival plans from the University and College Union (UCU) that were rejected at the scheme's decision-making committee stage.

Disquiet has led to local action at a number of institutions.

Staff at the universities of Oxford and Cambridge have forced their institutions to begin full ballots, in which members can vote for the employers' or the UCU's plans.

Oxford's congregation has also passed a motion calling for USS to restart the consultation.

Staff at the University of Essex forced a general meeting on the issue with their vice-chancellor, Colin Riordan. In a matter of hours, 100 of them signed a petition calling for a staff ballot. Professor Riordan has refused to hold a vote.

And staff at the University of Warwick are aiming to convene an assembly to press the governing council to start a ballot.

A USS spokesman said that if any university "submits some comments as a result of holding a ballot, they will be considered by the trustee board alongside the comments made by eligible employees and their representatives".

On the call for fresh consultation, the USS spokesman said the company had received legal advice that the information provided "satisfies the requirements as set out in the consultation regulations, and therefore the consultation will end on 22 December 2010 as planned".

john.morgan@tsleducation.com.

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