Strike warning as increase in USS pension contributions backed

Joint negotiating committee says scheme members should contribute 9.6 per cent of their salaries, up from 8.8 per cent currently

August 22, 2019
Strike placards

Union leaders have warned that fresh strike action over UK higher pensions is more likely after universities backed proposals to increase employee contributions.

At a meeting of the Universities Superannuation Scheme’s joint negotiating committee, plans to increase members’ contributions to 9.6 per cent of their salary were backed by representatives of Universities UK and the independent chair, Sir Andrew Cubie. They currently stand at 8.8 per cent.

The University and College Union had set out its position of “no detriment”, under which employers would have covered the increased costs of funding existing benefits, allowing staff contributions to return to the April 2019 level of 8 per cent.

But UUK said that the settlement backed by the JNC was “fair”, with employers footing 65 per cent of the increase in contributions. Under the proposal, employers’ contributions will rise to 21.1 per cent of salary, up from 19.5 per cent currently, and 18 per cent in April. This would put the total contribution rate at 30.7 per cent.

The UCU said that it would now go ahead with a ballot of members at 69 institutions for strike action, opening on 9 September and closing on 30 October. Union members walked out for 14 days over the dispute last year, affecting hundreds of thousands of students.

Jo Grady, the UCU’s general secretary, said that she was “incredibly disappointed [that universities] have pushed to burden members with unnecessary and unfair extra costs”.

“Unless universities are prepared to pick up the increased costs for USS members, they will face another round of strikes,” she said.

Under the proposals backed by the JNC, the short-term increase in contributions has been limited in return for conducting the next fund valuation a year earlier than planned, in 2020-21. If a deal could not be struck at that point, the combined contribution rate would increase to 34.7 per cent in October 2021.

The UCU points to the findings of a joint expert panel set up by the union and UUK at the end of last year’s strike that suggested that existing benefits could be protected if employees paid 9.1 per cent and employers 20.1 per cent.

But, if the JNC had not backed the proposal, the USS had warned that it would raise employees’ contributions to 11.4 per cent and employers’ to 24.2 per cent in coming months.

It remains to be seen whether the JNC’s solution is accepted by the Pensions Regulator, which warned – in a leaked letter – that it would have “grave concerns if [this option] was used to justify delaying taking an action that otherwise the trustee would have taken in relation to the [current] 2018 valuation”.

In a bid to allay the regulator’s concerns, UUK has said that it would support rule changes that would prevent an institution leaving the USS scheme without the pension fund’s consent. After the departure of Trinity College, Cambridge in June, the USS warned – in another leaked letter – that a further departure could undermine the strength of the scheme.

“This provides a fair, short-term solution, acceptable to the Pensions Regulator and the USS trustee, which allows time for the joint expert panel to suggest options for the longer term,” a UUK spokesman said.

A USS spokesman said that the fund now needed to “consult UUK on the proposed schedule of contributions and recovery plan before we can finalise the 2018 valuation”.

“This will begin this week, in support of stakeholders’ desires to avoid the contribution changes currently scheduled for October under the 2017 valuation,” the spokesman said. “We will be asking UUK to respond, to this end, by 11 September.”

chris.havergal@timeshighereducation.com

POSTSCRIPT:

Print headline: USS pensions hike could lead to strike action

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