The UK needs a big debate on the sustainability of TPS for post-92s

The recent rise in employer contributions to the Teachers’ Pension Scheme (TPS) to 28.68 per cent – almost double that of the Universities Superannuation Scheme (USS) – presents a genuine and growing challenge for institutions legally required to offer it.

We absolutely agree that university staff deserve competitive salaries with generous benefits and high-quality pensions. The question is how universities can sustain that commitment responsibly at a time when all universities are facing financial challenges for a variety of well-documented reasons. 

Urgent action is needed, and many universities are looking at ways to manage the costs of TPS. Last week, Ucea and Universities UK asked the government to remove the requirement for post-92 universities to enrol academic colleagues in TPS. The University and College Union (UCU) has also called on the government to act, although its demand for an emergency financial support package to help universities meet TPS costs is less likely to appeal to ministers.

Some universities have chosen to employ their academic staff via subsidiaries using defined contribution schemes, thereby restricting access to TPS. At Northumbria University, we have chosen a path that prioritises access to a scheme with defined benefits and that offers colleagues a choice, rather than mandating change. We wanted our academic colleagues to have parity with those at other research-intensive universities and therefore rejected the option of a defined contribution scheme. Now that we have secured access to USS for existing staff alongside TPS, our colleagues can choose between two high-quality schemes with defined benefits based on what works best for them.

Crucially, in the long term, the overall cost of the reward package per employee to the university will remain the same regardless of which pension scheme a colleague is in. In our model, they can choose how that cost is allocated between take-home pay and pension contributions. Those in USS will have a salary that keeps pace with the rest of the sector, reflecting the outcome of national collective pay bargaining and the employer contributions for that scheme. Those remaining in TPS will have their salary growth restricted to reflect the higher cost of pension contributions, with total costs equalising over time.

Ultimately, we are aiming for USS to become the normalised pension scheme for our academic staff, as it already is in pre-92 universities. We are not reducing our commitment to competitive pay and pensions, and nor are we changing how we employ colleagues or any of their other attractive terms and conditions.

We recognise that decisions about pensions are important and complex, and we also know that moving to USS will not be the right option for everyone – we have been clear on this throughout. This is why we are giving colleagues appropriate time and support to make the right choice for their own circumstances. 

This support has included regular updates and briefing sessions, one-to-one guidance sessions with dedicated pension specialists, and a contribution towards independent financial advice for those who want it. We have also made additional commitments for colleagues close to retirement. For those who choose to move to USS, a one-off transition support payment of between £8,000 and £12,000 is available in recognition of the immediate savings the university will make. That scheme opened on 18 February. 

Last month, in recognition of union negotiations taking longer than anticipated, we extended the transfer date under our transition support scheme from 30 April to 31 May.  Our extension was announced once negotiations were exhausted, and colleagues understood our final position. This was a considered approach to ensure our colleagues had the time and space needed to make the right decision. This continues to be an important part of our approach, despite UCU’s claims to the contrary. Indeed, as USS is the mainstream pension scheme for the vast majority of academic staff in the UK higher education sector, including all research-intensive universities, any argument made against its wider adoption at Northumbria appears flawed.

We therefore found the article Nine in 10 Northumbria staff yet to agree TPS pension exit (12 March) difficult to reconcile with the reality on the ground. The figures cited captured a snapshot taken by union representatives while negotiations were still ongoing. At this time, hundreds of colleagues were midway through guidance and advice sessions, as they still are, and the deadline to transfer under the transition support scheme was still seven weeks away. Drawing conclusions from participation data at that stage was highly premature. 

We are pleased with the movement to date from TPS to USS. Over three-quarters of colleagues in TPS have booked an individual guidance session with our pension specialist team to discuss their personal illustration and circumstances. This demonstrates clear engagement with the process and whatever their decision, we are confident that we have offered a full range of support to colleagues in this process.

I would like to reiterate that we remain committed to competitive pay and pensions. The financial pressures caused by the increase in employer contributions for TPS have meant we had to act now, but we want to contribute to a broader, sector-wide debate with government on the sustainability of TPS for post-92 universities.

This is a challenge that will not go away. Constructive, well-informed public discussion is exactly what is needed. In her recent letter to the Department for Education, UCU’s general secretary, Jo Grady, urged the government to take immediate action to protect defined benefit pensions in our universities. This is exactly what we are doing here at Northumbria.

Andy Long is vice-chancellor and chief executive of Northumbria University.