New v-cs lambaste 'pensions snatch'

November 29, 1996

VICE CHANCELLORS of new universities claim that Government pension proposals will handicap the former polytechnic sector in its attempts to cope with funding cuts.

One leading vice chancellor described the proposals as the biggest pensions snatch since Robert Maxwell's raiding of the Mirror Group pension fund. Vice chancellors are to debate the matter at the next meeting of the Committee of Vice Chancellors and Principals next week.

The reform of the Teachers' Superannuation Scheme will make it too expensive for new universities to offer early retirement, say the vice chancellors. Old universities are not affected as their superannuation schemes are protected by independent trusts.

Vice chancellors in new universities fear that the prohibitive expense of early retirement packages, which often include enhanced payments as a way of restructuring and cutting staffing budgets, will lead to more compulsory redundancies.

Peter Knight, vice chancellor of the University of Central England in Birmingham, said: "The proposal is simply monstrous. It will leave us with staff who do not want to be with us and who we cannot afford. It will make changing staff profiles infinitely more expensive."

At present, all new universities pay set contributions, equivalent to 8.05 per cent of their gross wages bill (about Pounds 2.4 million for a medium-sized institution), into the national superannuation scheme. Thus the cost of an early retirement is pooled. Under the proposals, from April 1 next year new universities' contributions would be cut by 0.85 per cent.

The Government says institutions can use the saving to pay the extra cost of early retirements. But the universities are furious at the Government's plan to claw back this saving, about Pounds 7 million across the sector, through the Higher Education Funding Council. Tuesday's budget revealed that the clawback would be spread over three years instead of the one year originally proposed.

The proposals are made in a report by the Government actuary and are out to consultation. The consultation closes on January 17.

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