Pension makes sense

September 18, 1998

Readers of your piece on pensions in higher and further education ("Avoiding future shock", THES, September 11) may be wondering why the cost of the Universities Superannuation Scheme is greater to employees and a lot greater to employers than that of the Teachers' Pensions Scheme if, in the latter, "money paid in by employers and employees pays for current pensioners", and if the benefits of that scheme are "very similar to those under USS".

The answers are that it does not and they are not. The cost of increasing pensions in line with retail price inflation is met for the TPS directly by the Treasury, not by the employers or employees. This is not the case with USS and the cost of finding these pension increases accounts for all, or very nearly all, the difference between the employer contribution rates of the two schemes.

As for benefits, take two people retiring at the end of last month, both going at age 60 with their employer's consent but not at their employer's insistence, both with 35 years service counting for pension, both having been continuously at the top of their salary scale for seven years, one a USS member at the top of the "old" university Lecturer B scale, the other a TPS member at the top of the 1992 universities' senior lecturer scale. The former will have had at the end of his or her career a salary just Pounds 29 a year higher, but he or she will have retired with a pension over Pounds 200 a year higher.

It is therefore not surprising that the Association of University Teachers is looking for the earliest possible availability of USS membership to all university academic and related staff, as Lord Dearing also suggested, notwithstanding that USS has a higher contribution rate for employees.

Chris Banister President, AUT

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