V-cs paying for stalled USS talks, union says

UCU boycott of pension meetings may leave leaders with hefty bills. John Morgan reports

March 24, 2011

Vice-chancellors face extra tax bills of about £16,000 each after changes to higher education's largest pension scheme were blocked, the University and College Union claims - although pension experts dispute the figures.

Representatives of the UCU have refused to attend the joint negotiating committee for the £30 billion Universities Superannuation Scheme, as they fear a quorate meeting would rubber-stamp proposed changes to the USS, such as phasing out final-salary pensions. The reforms cannot now be introduced on 1 April as the USS had planned.

Another result of the UCU's actions is that the USS cannot implement measures to mitigate the effects of the government's lower threshold for pension tax relief.

As of 6 April, the annual amount that can be saved into pension funds and attract tax relief will fall from £255,000 to £50,000. The change will affect anyone earning more than £126,000 a year, but it will have the greatest impact on those earning more than £200,000, the UCU said.

Alan Carr, the union's treasurer and a member of its negotiating team for the USS, said that based on the average vice-chancellor's salary of £207,318 in 2008-09, the average extra tax bill would be £15,700 for someone with 30 years' membership of the pension scheme.

He added: "Our role in the USS is to represent all members of the scheme, including high earners. We were perfectly willing to put through rules intended to alleviate their tax position: we were not prepared to do that at the same time (as the employers) are trying to force through detrimental cuts to benefits for people already facing the threat of redundancy."

The UCU will hope that the tax bills spur vice-chancellors back to the negotiating table on the other more controversial changes to the USS, such as raising the pension age from 60 to 65 and linking pension increases to a lower rate of inflation.

Tom Merchant, the USS chief executive, says in a letter to institutions dated 10 March: "Regrettably, the recent events have also affected the ability of the trustee company to implement options to mitigate or eliminate the new tax changes that arise for some members as a result of the government's forthcoming changes to the pensions tax-relief rules."

But pension experts disputed the UCU's figures, saying there would be no additional tax charges for those receiving pay rises in line with inflation, and that any additional charges could be covered by carrying forward unused allowances.

A spokesman for the Employers Pensions Forum said: "Rather than tax issues, employers are concerned about UCU not attending negotiations, disrupting the business of the USS to prevent any of the necessary changes - not a viable position for a £30 billion scheme."


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