Proposed improvements to the lecturers' pension scheme could stave off the looming recruitment and retention crisis, the Association of University Teachers believes.
Trustees of the Universities Superannuation Scheme are consulting employers and members on reforms that would offer a 6 per cent increase in pensions.
The plan is to give members an annual accrual rate of 1/60th of their final pensionable salary compared with the current 1/80th. This rate is considered outdated following increases to life expectancy and long-term projections of low inflation and interest rates.
USS pensioners get an index-linked pension of 1/80th of final salary for each year of pensionable service, plus a lump sum on retirement of three times initial pension. Thus an academic earning £40,000 a year, after a 40-year career, would receive a pension of £20,000. On a 60th scheme, the final pension would be £6,666 more but a lump sum under this scheme has to be paid for through a voluntary reduction in pension.
Chris Cheesman, assistant AUT general secretary responsible for pensions, said the benefits could be attractive to potential entrants.
But the AUT says in a consultation paper: "This change... can be achieved only at the expense of greater contributions from participants in the future."
Some £650 million would have to be committed from the fund's actuarial surplus for the proposed accrual rate to be applied to the past service of those in active membership when the scheme is changed. Based on the most recent actuarial valuation of the fund, the change would cost an additional 1.3 per cent of salary.
The AUT paper says: "It is not likely that employers will be prepared to see their own percentage contribution (14 per cent) rise significantly for this purpose."
Ms Cheesman said that any change depended on the next full actuarial value of the USS fund.